Gather as much information as you can about the property that you are interested in buying. For example, get specifics about the property like the size, amenities,average utilities costs, hazard insurance costs and property taxes. Then research the area in which the property is located. Find out about the benefits of living in that area and its drawbacks, and compare the price of properties in that location as compared to those in other parts of the city or town. Also look at properties similar to the one you are planning to buy. All this research will help one to evaluate the property against your budget and will also assist you in planning your bidding strategy.
Tips For Buyers - Real Estate Auctions
It is best to be clear about legal issues in case of real estate. Try to read through all the paperwork related to the property. Have your attorney review a copy of the Purchase Agreement. Contact the auctioneer or your agent beforehand and get a copy of any documentation that you can. If possible, also get copies of any building or pest inspections that are done for the property before the day of the auction.
Real estate investments involve huge financial transactions. Hence it is very important to firmly establish your budget well before the auction date. DO NOT EXCEED YOUR BUDGET! If possible set an uneven bidding limit. For example, instead of setting the bidding limit at $210,000, set it at $211,000. Sometimes a bid higher by $500 may win you the auction as that might help you to outbid your fellow bidder. While deciding on the budget, take into consideration possible costs like legal expenses, auction fees, closing costs, realtor fees or fee of other agents that you may employ to help you with the purchase.
Know what you are bidding on at the auction. Some auctions allow potential bidders to visit the location and look around, while others don’t permit potential bidders to examine the property ahead of time. If you are permitted to visit in advance, bring a real estate agent and contractor along with you to take a look at the property. Take pictures and bring them to the auction with you. Whether there is an opportunity to see the property before the auction or not, it is important to sit with a real estate agent to determine recent sales in the area. This will give you a better idea of an ideal bid for the property.
Understanding the bidding process and rules can save you time and stress on the day of the real estate auction. Contact the auctioneer to find out where the auction is held, how much money you need to bring with you and your payment options.
If an auction is advertised as AN "ABSOLUTE AUCTION", the property will be sold to the highest bidder, at any price. These properties always attract the most bidders because the property will be sold, regardless of price!
If a property is not advertised as "ABSOLUTE" it is, by default, an auction with reserve. The word "reserve" is ofter misunderstood but what it actually means is that the seller reserves the right to bid, thus the reserve price is the bid of the seller. If an auction is NOT ABSOLUTE, the auctioneer can accept or reject any bid. If the auctioneer is calling for a hundred thousand dollars and you offer seventy-five thousand, he may choose to accept or reject your bid. you can often judge when you are approaching the reserve price by the call of the auctioneer. The auctioneer is more likely to accept smaller increments when you are close to the reserve price!
Even if you don’t meet the reserve with your bid, there is still a chance to make a deal on the property. Often there is a meeting of the minds between the seller, buyer and auctioneer, with all giving a little to make the deal happen. Many properties are sold within one week after the auction.