Before You Place That Bid: Understanding Real Estate Auctions

People can get homes at a fraction of the cost of a standard home price simply by bidding on and winning at a real estate auction. Often, people who like to invest in real estate attend these auctions as a way to get affordable homes at a low price, and then remodel and sell them at a higher price.

But what about the average home buyer who just wants to save some money? Here is some helpful advice before you head out to the next real estate auction in your area

Caveat Emptor

Before you plunk down a large amount of money, keep in mind that most real estate auctions are foreclosures or bank-owned properties. This means they are sold "as-is" and could have some condition issues that can potentially cost you a lot more money in the long run in terms of repair.

In most cases, property auctions are sight unseen, meaning the bidders are only bidding on the property they see from the outside, not the inside. Most of the time you cannot go inside the home, so there's no telling what the condition will be like. Keep this in mind before you bid on any property.

Consider Location

Of course everyone wants to buy a home at an unbeatable price. But remember that in real estate it's always about location, location, location. Will the home be in a good school district? How far away are you from work and shopping or family members? Is the neighborhood safe?

It can be tempting to buy a house at a great price, but once you move in remember you're going to be living in that area for years to come, so keep the location in mind. You can drive around the neighborhood in the evening to get a feel for what the community is like. 

Understand Bidding

For most auctions, the winning buyer must present a certified check immediately upon confirmation of their winning bid. You must have all of the money already available in order for it to be a viable sale. Set a limit and make sure you have the cash available before you bid.

It's easy to get caught up in the action when people begin bidding, so you must keep the dollar limit in the back of your mind at all times. Some auction companies may offer or allow payment plans, but many expect payment in full at the close of the auction. Find out before you attend the auction so you're not caught off guard.

Contact a company like Greenways Real Estate & Auction if you want to know more or have other questions.