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Real Estate: Buying a Home Through Auction

Are you in the market for buying or selling a new home? Are you dreading the open houses, the negotiations, the uncertainty and the monotony? Perhaps you should consider a real estate auction or an online auction. Rather than pouring over real estate listings or speaking to dozens of real estate agents, real estate auctions can be an speedy way of buying or selling real estate. Before attending a real estate auction, though, you need to become informed of the ins and outs of the industry.

What is Available at Real Estate Auctions?
The types of homes for sale at real estate auctions vary from homes for small families to large family homes, commercial real estate, office real estate and many others. The homes are mainly non-distressed, meaning they are not fixer-uppers. People choose real estate auctions or online auctions because of the fast-paced competitive environment and the fact that deals are often closed quickly and efficiently. This is why it is important to know all your rights and obligations as a home seller or buyer.

Benefits of Real Estate Auction for Sellers
If you are considering selling your home through an auction, here are some advantageous that may appeal to you:

 

  • The auction takes place on the seller’s property
  • The seller decides the time and date of the auction
  • The auction provides for a quick sale
  • The seller does not have to negotiate
  • Buyers must be pre-qualified financially to put up a bid
  • The property is exposed to a large amount of buyers
  • The property will be sold at market value or perhaps higher
  • The seller does not have to bear the burden of the property cost

 

Benefits of Real Estate Auction for Buyers
Of course, buyers can also gain from buying their home through an auction:

 

  • Is it a smart real estate investment strategy
  • Can bid on several properties at the same time
  • Assurance the seller is dedicated to selling their property
  • Can determine the purchase price of the home
  • Do not have to engage in negotiations

 

How to Participate in a Real Estate Auction
Before you participate in a real estate auction you must register with the office of the real estate company who is hosting the auction service. You will have to post a certain amount of money in certified or cashier’s check form. If you are not the highest bidder by the end of the auction, your check will be returned to you. If you are the highest bidder, you will have to sign a sale agreement that includes the auction terms.

Steps to Sell Your Property via Real Estate Auction
If you are interested in selling your property through a real estate auction, you must find a real estate agent who will organize the auction, locate an auctioneer, ensure house inspection, promote and market the property. You must ascertain a "reserve price" for your property before the auction. A reserve price is the minimum amount of money you are willing to accept for your property. Auction bidders do not know what your reserve price is, only that you have one. When someone reaches your reserve price with their bid, they are told they have reached the reserve price.

What is your Reserve Price?
There are a number of steps you can take to determine your reserve price:

 

  • Have a real estate appraisal: Real estate agents will usually perform an appraisal for you which includes inspecting your house and deciding the monetary value of the home. You want to make sure the real estate agent is qualified or licensed to appraise your home. The house may sell for less than you expected, which is normal for most home sellers. You do not want to oversell or undersell your home.
  • Have a comparative market analysis done: The real estate agent will determine the value of your home relative to the value of other homes in your area.
  • Determine your net gain: Your net gain refers to how much money you are left with from the sale of your home after paying all the fees involved in selling your home, for example, real estate agent’s fees, repair costs, auction costs, etc.
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Buyer Beware
The Federal Trade Commission published some safety guidelines and what to watch out for when browsing online for real estate. If you are going to advertise your property online or look for auctions online you must know your rights, obligations and etiquette of online real estate.

Here are some guidelines to keep in mind:

 

  • Read all rules and terms of a website before bidding in an auction
  • Decide what you think is a reasonable price for a certain property before you bid.
  • Do not give out personal information such as name, number, address, social security number, etc. to anyone unless you can verify their identity.
  • Obtain the contact information and phone number of the seller and speak to her to verify identity.
  • Research what protections, return policies and warranties are offered to buyers by the website.
  • Save all your information and print out any transaction records so that you have a copy if needed in the future.

 

Rules for Advertising Property Online
Those people advertising property on a website are legally obliged to provide as much information about the real estate as possible. This can include providing a photograph of the property; explaining if the home is new or refurbished;, answering all buyer’s questions about the property and including details on their shipping and return policy.