Most people choose the standard option when it comes to buying a house. That is, you find a property you like, deal with the agent, view it, make an offer, and then wait for the process to be completed and you to get the keys. It takes between 30-90 days to complete.
However, there is another option which is buying through a real estate auctioneer. Many people avoid this route as it has more potential risks. However, if you get it right, you’ll find it has a great reward, the opportunity to get a property for less than it is worth.
But, that’s only one of the rewards of buying at auction. Because of the strict auction rules the property is effectively yours on the day of the auction, all you have to do is pay for it.
Properties At Auction
Some of the best bargains at auction are properties that are in foreclosure and being sold by the bank or are taken due to unpaid taxes. The businesses selling these are only interested in getting their money back, not in making a profit as this would have to be passed on.
But, they are not the only properties at the auction, you’ll also find people in a rush to sell and some that can’t shift their home for one reason or another. That’s why you need to proceed with caution.
Of course, you need to be aware of the risks:
Lack Of Viewing
When bidding on a house at auction you will have pictures of the property and any information that has been put together by the seller. But, you don’t normally get the opportunity to view the property or have any inspections done yourself.
That means you are hoping for the house to be in good condition but taking a chance. It could simply be trashed inside or you may find more complicated issues, such as bad plumbing, electrics, or even structural issues.
In short, you have to be prepared for the worst, anything else is a bonus.
The key to getting a bargain and being prepared for any work is to set yourself a realistic budget and stick to it. In principle, this sounds simple. However, in practice, it can be more difficult as you will find the auction room is competitive. If someone else wants the same property you can get into a bidding war and blow your own budget. That is never a good thing.
The other big risk is that you misjudge the property. This is surprisingly common when in the auction house and feeling under pressure. You may have forgotten to check the location or be fooled into thinking the house is bigger or smaller than it actually is.
These are all easy mistakes to make and emphasize why you should prepare thoroughly before you visit the auction.
Of course, when you get it right you’ll buy a property below market value and be able to move in almost immediately. That’s an exciting opportunity and reward, it’s possible if you do your homework first and are prepared.