Many homeowners have begun using auction houses to move property rather than engaging real estate brokers. In the last 10 years, home auctions have increased a dramatic 10 percent, which adds up to somewhere in the area of 20 billion dollars moving through the auction industry. In 2010, auctions are up even more now close to 14 in the first quarter according to the National Auctioneers Association.
Advantages of Selling a Home at Auction:
The main advantage to a seller in terms of auctioning a house is that it doesnt have to take a lot of time. You can actually move a house in 10 weeks by putting it up for bidding. Additionally it is much more difficult to wrangle out of an auction. The rules are set up so that once the gavel sounds, thats it. The property is sold.
While you can find real bargains this way, particularly in foreclosure properties, currently many houses are selling at close to market value. This is good news for sellers who may have tried to sell their house on the open market for months, if not longer. Rather than continue to feel buried under debt, and slash the houses price yet again, putting the house on the auction block can turn things around quickly with less loss.
How to buy a House at Auction:
Because more and more properties are becoming available at auction, it helps to know whats expected of you before you head off to bid on properties. First things first. You need to get your finances in order. Go to a bank and get pre-approval for a mortgage and have this paperwork with you at the auction house.
Step two is figuring out what properties interest you. Your local newspaper will typically have ads for housing auctions, and you can also often find listings on the Internet. Auction houses usually offer more than one property at a time, and set up specific times and dates when you can walk through the property. If the Auctioneer doesnt offer preview dates, call them and get as much information about the property as possible and set up a home inspection if youre really interested. Do not bid on any house if you havent had an inspection or gotten written agreement for one as a contingency of sale. If a property is being sold as is you probably wont be able to get that in the deal.
Step Three is the bidding itself. It is very important that you stay within your financial comfort zone here. If you go over, your lender may not agree to the extra money. When that happens you either have to find another source of funding or face steep penalties for withdrawing your bid (this can be upward of 25%).
Helps & Hints
When youre researching foreclosure properties, find out how much is currently owed on the house and where the auction house is starting bidding. Use that information as a basis for comparison to recent home sales in the same neighborhood as the property. Remember to compare apples to apples you want to see the numbers on houses with a similar amount of space, and the same number of bathrooms, bedrooms and various amenities (like a pool).
Even though youre trying to buy a house remember that other people may be bidding on the property too and some of them will have LOTS of auction experience. Additionally if there are any liens on the property, you need to be prepared to pay these along with whatever you bid on the property.
Sometimes an auction may be postponed or cancelled without notice. Before you head out, call and confirm if the auction is still active, and re-confirm all the requirements for bidding. For example, you may be required to have a cashiers check for 10 percent of your bid to secure yourself as the high bidder until your loan comes through.
If youve never been through the auction process before it doesnt hurt to go to one and just observe. Youll learn a lot, and dont be afraid to ask questions. Each state is a little different in terms of the laws and rules that govern home auctions as well as taking possession of the property.
Last but not least, its perfectly acceptable to walk away. If the bidding goes beyond your budget or becomes too rich compared to what youre actually getting for that dollar, just stop. Auctions can become very competitive and its easy to get caught up in the atmosphere, forgetting that furious bidding doesnt necessarily mean a fantastic property. The best property for you is one that you can afford, and that also meets your lifestyle needs. Keep your goals in mind. There will always be anther day with another block of houses for your consideration.