How to purchase real estate from an online auction
Are you looking to venture into the real estate business during retirement? You can get your home through online auctions. Many buyers look for suitable homes from online platforms. Some of these homes come with a print that notifies buyers that the sale is subject to auctioning. Buying a home through auction is different from using the standard procedure.
In this case, the bidding is done through the web and everything is electronic. Most people assume that online auctions involve foreclosure homes. This is not necessarily true since some homes can be short sales. Banks also put up the homes that they own up for auctioning. Some investors unload the homes that may have been purchased from particular banks in bulk. Such investors may be looking to get the best deals for each house and therefore auction them online.
Consider the pros and cons
Some homes under auction may also be distressed sales. Homes that are owned by investors may be ready to sell as flipped homes. A flipped home has new appliances, stone counters or even upgraded flooring. The remodelling is what attracts buyers purchasing homes for the first time. The first thing you may note with auction homes is the online bid price. This is meant to attract potential buyers and it may not represent the exact sales price.
The bid price is somehow related to the market value. It represents the price in which the auction will begin with and can be lower than what the seller will take. Auction websites post the market value for the homes but you can always know the true value by examining the comparable sales. Research the prices of similar homes that have been sold a little earlier to determine the true value of an auction home. It is not a must that the house sells at the asking price.
Bidding can be hard
Different homebuyers start bidding at the bid price as it moves up. You can check out the prices offered from the website during the bidding session. Sellers usually have a reserve price which they do not disclose until the bidding moves in their favour. If you’re interested in looking to buy without the help of an agent, see here.
Most people fear bidding for homes through online auctions with the assumption that they may lose their deposit. This should not happen if you understand the rules of bidding and perform your obligations. Your deposit can only be at risk if you cancel once your offer has already been accepted. Auction websites do not allow you to renegotiate on the price of the home after the bid is already complete.
You can be part of the auction by opening an account with the website. Evaluate if it is possible for you to obtain enough financing to meet the sale price. Ensure that you talk to the lender before you think of placing a bid so that you confirm that you will be approved for the loan.
Some auction websites allow you to watch as the bidding occurs. In a case where the home being auctioned is a short sale, the seller may have accepted an offer from one of the buyer and may be waiting for the bank to approve it. The bank can place the home for auctioning in an attempt of getting a higher offer from the auction website.