While the traditional method of
trawling for sale listings, making bids, and negotiating with the seller has
been a popular rite of passage for many home buyers, buying a house at auction
is swiftly becoming a favored way to purchase property.
Buying a home through auction can be
tricky, so it's best to do your research and keep your cool on auction day,
lest you find yourself stuck with a less-than-ideal place to live for a price
you didn't expect to pay.
If you're in the market to buy through
auction for the first time, here are some things you need to know.
Real estate agents will often use
the same methods to sell a house by auction as they do in a traditional sale:
adverts in newspapers and online, posters in their office windows, and signs
outside the property. Depending on the reason for the sale, a home auction may
be held at a local courthouse, an auction house, or, in some cases, online.
Viewing a House before Auction
It's always best to try before you
buy, so make sure you are able to view the house prior to the auction. Some
real estate agents will insist on exterior views of the home only, but, if
you’re a new buyer, this may not be enough. Seasoned home buyers can often pick
a house by looking at the exterior and reading a description; buyers new to the
game should bank on seeing inside first.
Look into the price that is offered
for the home you seek to buy; sometimes, if a house is in foreclosure, the
starting price of the home may be the balance of the mortgage, or a lower price
to get people to begin bidding. Lenders, such as banks, are not permitted to
make a profit from selling a foreclosure and may often sell homes at a loss;
look out for these bargains when checking house prices in your local area.
On auction day, make sure you enter
the auction knowing the general value of the house and the maximum amount you
are willing to pay; having these parameters set out will help prevent you from
getting swept up in the auction process and bidding more than what you have or
what the house is worth.
On the day, bring a cashier's check—auction
holders ask winners to pay for auction fees, bidding fees, and a deposit on the
purchase. If you are successful on auction day, you will then have to close the
deal with the seller just like any other property purchase. If you need financing,
you may wish to be per-cleared by your lending company before the auction.
Also, be aware that your winning bid may not be accepted. Many homes have a
reserve price, and if the reserve is not met, the house will not be sold on the
day.
If you are interested in buying a
home through auction, go into the process knowing that auctions can be riskier
than buying a home via traditional means. Also remember that just because a
house is up for auction doesn't mean you are guaranteed a good price. Some
houses sell for a lot of money and others sell cheaply but have hidden costs,
such as urgent maintenance.
When you're ready to find your new
home by auction, call your local trusted real estate professional for
information, answers, and the best deals in town.
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