How to attend real estate auctions? Before you go for an auction there are many aspects that should be taken care of. You need to prepare yourself for the specific investment objective you are going to do. When you buy a home at auction there are many factors involved which can affect your financing options.
A specific period of time is set between the announcement of the auction and the actual date of auction. This time can be utilized to find out everything you need to know about the property. In general you need to inquire about all these factors when you are planning to attend an auction-
How to Attend Real Estate Auctions
INVESTIGATE ABOUT PROPERTY
Research the property that is on the auction. Try to find out if the property is worth spending on. For this, you can talk to the neighbours and its prevoius owners. They can also tell you if someone is settled there without a right, with the intent to acquire it. If it is so, you will need to expel them out with the support of law after you own the property.
CONDITION OF PROPERTY
Condition of a property may vary from excellent condition to poor condition. At the auction, the property will be sold “as is” that is, in whatever present condition it is. That means you are going to carry the complete expenses of all the repairs needed if you win the property. For this, you can take help of a contractor to find out the cost of the repairs needed to make the property habitable. So set your investment parameters before you go for an auction.
Take an appointment with the auctioneer and find out if any proir inspection is being done. You can also get inspection reports from previous owners and local real estate agents. They can help you in determining the estimated market value of the property. If the property on account of auction is a distressed property then access to the property before the auction is not allowed.
You should figure out the financing options available before you enter the auction. You can apply for a loan from banks and you should try to apply for the highest possible amount because after all it is an auction and you don’t have any idea how much the house will be sold for. In general you should budget for the financing costs such as loan, property taxes, its insurance cost, repairing cost and other utilities.
Bring all the important documents to the auction. Be sure you carry all the proofs of financing information, bank’s statements for down payment, your cheque book and your identification cards.
When you register for the auction, you are required to deposit a specific designated amount which is usually 5% to 10% of the total amount of the property. If you win the auction, the amount will be added to your purchase price. However if you don’t win, you are free to take your cheque back. This process is just to assure that bidder is serious about purchasing the property.
Purchaser is responsible for all settlement expenses including the fees, taxes and commissions paid to the auction company or the real estate agent. The settlement expenses and its period is specified within the terms of sale.
So, as mentioned above, do your pre-auction due diligence properly. Also dictate the characteristics of the property and find out all the risks involved. Read carefully the terms and conditions of sale and transaction details prior to the auction. You can also take advice from lawyers dealing with real estate matters or from a experienced real estate agent. All these considerations will help you execute your decision properly on the day of auction.