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A real estate auction is something that many consider to be a win-win situation: a house is sold quickly to qualified buyers who essentially decide its value with their highest bid. How does it work?
Properties are pre-inspected and buyers are pre-approved. Buyers and sellers all come to the same place, wherever the auction is located, and the properties are presented. After that, it’s pretty much what you picture when you think of an auction—the auctioneer gets things started, and buyers indicate the price they’re willing to pay by raising paddles or cards. The property is sold to the highest bidder, and paperwork is signed on-site. Closing typically happens very soon after the auction, usually within 30-45 days, so buyers must be financially ready to pay their closing costs fairly quickly.
Homes that appear in real estate auctions are often distressed properties or foreclosures being sold by a bank or lender, but non-distressed properties can be sold this way, too. Usually the properties are open for a few weeks prior to an auction for interested potential buyers to go in and take a look around. They’re supposed to be pre-inspected, but you can always pay for your own inspection too—just realize that you may be paying for a service on a home you may not even come to own.
The details will be different depending on the organization of the auction, so know that there may be other procedures or requirements. Sometimes, for example, a property is on “reserve”, which means that the seller as to approve the final price. Other times there may be financing available. And sometimes there will be extra fees tacked on to the final price you pay for the home, like an auctioneer’s fee or a buyer’s premium. It all depends.
While there are benefits to buying and selling via auction, there are drawbacks as well. Though auctions do allow sellers the advantage of avoiding carrying costs by selling their homes very quickly, the buyer can be at a disadvantage if they don’t have a real estate professional walking them through the home buying process. And even if a buyer finds a property they really like, they may not be able to afford the highest bid.
For more information on real estate auctions, check in here and here.
A real estate auction is something that many consider to be a win-win situation: a house is sold quickly to qualified buyers who essentially decide its value with their highest bid. How does it work?
Properties are pre-inspected and buyers are pre-approved. Buyers and sellers all come to the same place, wherever the auction is located, and the properties are presented. After that, it’s pretty much what you picture when you think of an auction—the auctioneer gets things started, and buyers indicate the price they’re willing to pay by raising paddles or cards. The property is sold to the highest bidder, and paperwork is signed on-site. Closing typically happens very soon after the auction, usually within 30-45 days, so buyers must be financially ready to pay their closing costs fairly quickly.
Homes that appear in real estate auctions are often distressed properties or foreclosures being sold by a bank or lender, but non-distressed properties can be sold this way, too. Usually the properties are open for a few weeks prior to an auction for interested potential buyers to go in and take a look around. They’re supposed to be pre-inspected, but you can always pay for your own inspection too—just realize that you may be paying for a service on a home you may not even come to own.
The details will be different depending on the organization of the auction, so know that there may be other procedures or requirements. Sometimes, for example, a property is on “reserve”, which means that the seller as to approve the final price. Other times there may be financing available. And sometimes there will be extra fees tacked on to the final price you pay for the home, like an auctioneer’s fee or a buyer’s premium. It all depends.
While there are benefits to buying and selling via auction, there are drawbacks as well. Though auctions do allow sellers the advantage of avoiding carrying costs by selling their homes very quickly, the buyer can be at a disadvantage if they don’t have a real estate professional walking them through the home buying process. And even if a buyer finds a property they really like, they may not be able to afford the highest bid.
For more information on real estate auctions, check in here and here.
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