Properties which have been foreclosed or repossessed by a bank or mortgage business are often resold in the auction, as are houses which are a part of estates. For the house buyer, auctions may provide chances to snap up a deal. But, scoring a deal requires careful planning, meaning auction novices should do their homework before they start bidding.
Inspect the Property First
Most auctions will have an open house ahead of the main event to permit prospective bidders to inspect the land. If at all possible, bring together a professional house inspector, contractor or property agent to provide the place a once-over. Calculate the cost of repairs needed to make house livable and factor that into the amount you’re willing to bid. Inspect numerous properties, not only one, to leave yourself more choices.
Does Your Research
The best bidder is well-prepared. Information regarding the area, particularly the costs paid for comparable homes. Be wary of neighborhoods with an abundance of foreclosures, as this may mean that land values are still on the decrease. Check local documents to be certain there aren’t any tax liens or other limitations on the property to be auctioned.
Know the Law
Research local laws related to the purchase and possession of a house. These include laws related to taxes, upkeep and title transfer. Many cities assess fines for owners of properties. A fixer-upper property may suddenly seem like less of a deal if buying it means getting struck with a heavy penalty.
Attend a Practice Auction
Before showing up at an auction in attend another home auction. This will allow you to get a feel for the mechanics of bidding and also make you comfortable on the big moment.
Bring a Lot of Cash
The amount that winning bidders have to put back on their purchase depends on the policies of this auction home, but be cautioned it may be up to 100% of their bid cost, and a home commission. Based on MSNBC, many auction houses require bidders place a minimum deposit before bidding, usually around $3,000 in the form of a check.
Leave Emotion at the Door
At the auction, formulate a strategy and stick to it. It’s easy to get caught up in the excitement of a bidding war to get a hot land, but this could end disastrously. For each property you’re interested in, set a maximum price which you’re willing to pay, and adhere to it. Never bidding on a property you haven’t been scrutinized.
Bid Strategically
When bidding, adhere to a few basic principles. According to Bank Rate, it’s a fantastic idea to stay out of a heated bidding contest until it warms a bit, as there’s no feeling in stoking the emotions of other bidders. Additionally, properties sold in the market can opt for less money, as some exemptions remain out of their first rounds while they attempt to find a handle on the process.