The traditional way of finding a property is through looking on a real estate agent’s listings or visiting open houses. But some people also get to buy their homes through auctions. Yes, auctions.
But do properties end up in auctions? There are two ways in which a property ends up in that situation. The first one is when the owners of the property failed to pay the mortgage for several months. The other one is when they fail to pay the property taxes allotted. In both scenarios, the government has the power to get the property and put it in an auction.
How does it work?
Potential bidders may see the property during an open house. There are also listings that include information about the property so that bidders will have an idea on how much they should bid. An auction for a property starts at the balance remaining at the mortgage of the property.
Bidders may pay for the property in the auction. If they win, they will have to pay auction fees or bidding fees alongside the earnest money deposit.
Benefits
Auctions are great for buyers who are looking for unusual properties that you don’t often see. It’s great for real estate investors who are simply looking for their next big acquisition. It’s guaranteed that you may avoid traditional properties and end up with something more special. Auctions also assure you that the property will belong to you since the sale is already made once the hammer falls down. Aside from this, auctions are a great way to check out properties in just a single event.
Disadvantages
Properties in an auction are not always in great shape since their former owners have had financial troubles and were not able to maintain its form. Another disadvantage is the bidding war. There’s a chance that you may lose out, making you lose money and time in the process . In the end, there’s no assurance that the property that will get is truly what you are picturing in your head.
Prepare yourself
Heading to an auction? Begin an intensive research first before entering a bidding war. Study the catalog and visit the open house if you can. You also have to limit your expectations on the current status of the property. Remember that it might not be in its best shape. When the bidding war starts make sure that you bid the appropriate price and that you won’t go overboard.
When it comes to auctions, research and having fun comes a long way. Enjoy bidding and the investment that you’ve been wanting for!
