For prospective home owners, the thought of spending hundreds of thousands of dollars on a new real estate build can seem overpowering. The alternative is to purchase a home at auction. Real estate auctions are set up by the lender to rid the bank of the burden of the piece of real estate that has been foreclosed upon. If the bank is not able to sell the foreclosure at a price they see fit, they will post the property for public auction.
Public real estate auctions are tricky, in that, the lender does not have to sell the home even if the bids are relatively high. The lender is in complete control of the home title and can choose whether or not to accept the highest bid during the auction. If the lender does not accept the bid, the auction will be for naught and the lender will retain ownership of the piece of real estate despite the auction.
For those trying to purchase a home through a real estate auction, it is best to be prepared for the home sale from the time you set foot on the property. There are five things every potential buyer will need to do in order to prepare for a real estate auction.
o Obtain all information. Many real estate auctions will require the home buyer to present some form of deposit or proof of lender approval at the time of sale. If the lender agrees to the price, and often a lender representative will be on site for the auction, the buyer will need to prove they have the financial means through which to pay for the home. The initial deposit required or proof of immediate lender approval is always a great item to have on hand.
o Take a shot or two. When walking through the home before the auction begins. Take a few pictures of any and all blemishes in the home. Make sure to look beyond the physical knick and scratches on the homes surface. With camera in hand, you are looking for things that may potentially cost many dollars to fix, not just a coat of paint.
o Check the comps. Before heading off to the real estate auction, make sure to check the comparable home prices in the area. If the homes in the area are selling for $150,000 and the bid on this home reaches that point, there is no sense in buying this home at auction. Real estate auctions are often held on homes that are dilapidated and in need of repair. If a home in good condition is selling for the same price as the auction of this home, you can find a better deal.
Real estate auctions are a quick and easy way to save thousands on the home sale price. When attending an auction with the real idea of buying a home, you will need to be prepared for the chance that our bid may actually be the one chosen. Obtaining pre approval for a home loan, walking the home for possible high priced fixes and comparing the house to homes in the area are the best ways to stay on top when the gavel hits the podium.