RISMEDIA, July 5, 2011—With foreclosures flooding the real estate market, many property buyers and investors are hitting the auction circuit looking to capitalize on the next great deal. For those that are new to the auction block, there are a few ‘rules of thumb’ you’ll want to keep in mind before placing your bid. PropertyAuction.com provides some essential tips when looking to get in on the auction action, including:
1) Exercise your due diligence. Arm yourself with as much information on the property of interest before you bid. Many auctioneers provide a Property Information Package that contains vital information about the property (demographics, environmental information, tax data, etc.) as well as the contract of sale. Some simple online research prior to the auction can also assist in finding out some need-to-know facts before you invest your time and money.
2) Fully understand what ‘As Is, Where Is’ condition entails. Pretty self-explanatory, you are agreeing to purchase a property with whatever flaws it has at the time of sale, in the location stated on the contract. Unless there is something specifically outlined within the contract, the “As Is, Where Is” item means that the seller is not responsible for any damages or repairs the property may need. This could be as minimal as a broken window with a location on a busy street, or as mammoth as environmental issues on a property located right next to a set of working train tracks. Know what you’re getting into before you get into it.
3) Be aware that most auctions do not come with financing. “Since the majority of real estate auction contracts have no financing contingencies, it is imperative for a prospective auction buyer to be sure of their ability to purchase the property in question,” advises Ori Klein, president of PropertyAuction.com. “Usually, there are no refunds on bid deposits due to lack of financing if you are the winning bidder. Decide on the highest price you are willing to pay for the property in question and tack on some extra for additional fees. Have your funds lined up and ready to go by the time you’re going to bid.”
4) If you can’t close, don’t bid. If for some reason you can’t close on time, you can lose your deposit and could be held liable for additional damages and daily penalties. Be aware that most real estate auction closings are within 30 days. In short, be prepared to buy or walk away.
5) Don’t bid with your emotions. Most people have a ”dream house” in mind, or are seeking to start a business in a swanky new office building. Whatever your expectations, come prepared with a price you can afford and don’t go over it. Remember, real estate auction sales are final.
6) Inspect the property. Just as in traditional sales, prospective buyers can usually have a chance to inspect real estate properties offered at auction. These inspections are usually arranged by appointment or at specific scheduled times designated by the auction company. This is an excellent opportunity to find out all the ‘As Is, Where Is’ details you need to know before bidding.
Bottom line: You can get deals at real estate auctions. As a buyer, you simply need to do your homework beforehand, be sure of what you can afford at the time of auction, and keep a cool head come bidding time. Many a first-time home buyer and business investor have walked away from an auction with a newfound goldmine.
For more information, please visit www.propertyauction.com.