Posted on: 24 November 2015Share
All kinds of people buy real estate at property auctions: investors looking for rental properties, individuals searching for a family home, and business owners hoping to find a better storefront. Auction houses, such as Bob Parks Auction Company LLC, sell everything from one-bedroom condominiums to large agricultural operations. These tips will help you to find a good property rather than a bad deal.
Choose Your Preferences
Be specific about what you want: type of property, acceptable neighborhoods, nearby amenities, etc. If you are looking for a home for your family for example, you'll want to research which areas have good schools and are safe for kids. Additionally, decide if you will be happy with a fixer upper or whether you prefer something less challenging.
Sign Up With Auction Houses
Research which auction houses serve your desired area as there are both local and national establishments. Sign up for their newsletters and bookmark the various websites. Auction property listings are announced in advance to generate interest and increase attendance. Read through the listings to see if any meet your criteria.
Get Your Finances in Order
Real estate auction houses only allow a specified number of days to pay the full balance on your purchase. Get approved for a first or second mortgage before you attend an auction if you plan to tap the equity in your home. You'll have an opportunity to address any snags in the application process, such as a black mark on your credit report.
Cash buyers should determine the maximum amount of savings they are willing to spend. When calculating how much you can invest, include the buyer's premium that is common in real estate auctions. It ranges from five to ten percent of the sale price. For example, if you have a winning bid of $40,000 and there is a five percent premium, your actual sale price is $40,000 + $2,000 = $42,000.
Learn the Rules
Most real estate auctions require an advance deposit in the form of a cashiers check before they will allow you to bid on any properties. Check their website or other literature for the amount required, whether you need advance reservations, and other rules of the house. If you do not win any bids, save the cashiers check for the next auction.
When you see a listing that fits your preferences, try to personally visit the property ahead of time. If it still meets your expectations, hire someone to determine if the title is clean. Your attorney or a law student can do this for you. They will check for liens, unpaid property taxes, zoning problems such as an illegal room addition, and several other items. You cannot obtain title to a property until these encumbrances are resolved.
Go into the bidding process with a level head. Sometimes bidding becomes frenzied and people bid more than they can afford. Additionally, it's not uncommon for novices to pay more for a property than what it is really worth. Stay within the guideline amount you previously determined. You might have to attend multiple auctions before you find the gem you seek. People have found wonderful bargains at real estate auctions.