Buying real estate at an auction is one way to save thousands of dollars on any type of property, from undeveloped land to a luxury estate. Real estate auctions save the buyer time and expenses in terms of marketing and maintenance. For buyers, the competitive spirit of an auction can make the process intimidating, but knowing what to expect can help you bid with confidence.
Preparation
Potential buyers who attend a real estate auction are likely to have spent many hours preparing for the day. This process generally involves reading the auction guide, which the seller makes available by mail or at a local real estate office. This guide includes information about the property along with the terms of the sale. Bidders need to know what they're bidding on and what sort of financial obligation they will be making if they bid. It's also important for bidders to know the starting bid (the price at which the auction begins) and the reserve price (a higher price, below which the owner is not yet obligated to sell the property).
Inspection
A real estate auction follows an inspection period, during which prospective bidders may physically inspect the property. This is an important follow-up to the research process and gives bidders a chance to check for any problems or note the features they think give the property value. An inspection on auction day is a bidder's last chance to decide against participating in the auction.
Registration
In order to bid at a real estate auction, each bidder must first register with the real estate company handling the sale. Registration consists of providing some basic personal information and showing proof of identity, such as a driver's license. Some real estate companies allow bidders to register in the days or weeks before an auction, while others register bidders on-site. In either case, registration is important to prevent fraudulent bidders from participating.
Bidding
Registered bidders receive a bidder's package when they sign in at the auction site. This package includes information about the property and a bidding card, which can be as simple as a cardboard plate with a large number printed on it. The number serves to identify the bidder and prevents confusion during the bidding process. Once a representative from the real estate company has assembled the bidders and introduced the auctioneer, the bidding begins. The auctioneer states the opening bid clearly, or announces that the bidding is open, and waits for a bidder to raise her card and state an opening price. The auctioneer then states a higher price until another bidder raises her card, which signifies her commitment to buy at that price.
If You Win
When no bidders raise their cards to meet the auctioneer's next stated price, the last person to bid wins the auction at the most recent price. This bidder's number has already been recorded by an agent of the real estate company. The auctioneer states that the property is sold, restates the price and closes the auction. If you're the winning bidder, you'll likely be approached by an agent of the real estate company who will issue you additional paperwork or request a cashier's check. The auction guide will indicate the amount required for the winning bidder's deposit). The final step is to sign a purchase agreement. DHartman
Buying real estate at an auction is one way to save thousands of dollars on any type of property, from undeveloped land to a luxury estate. Real estate auctions save the buyer time and expenses in terms of marketing and maintenance. For buyers, the competitive spirit of an auction can make the process intimidating, but knowing what to expect can help you bid with confidence.
Preparation
Potential buyers who attend a real estate auction are likely to have spent many hours preparing for the day. This process generally involves reading the auction guide, which the seller makes available by mail or at a local real estate office. This guide includes information about the property along with the terms of the sale. Bidders need to know what they're bidding on and what sort of financial obligation they will be making if they bid. It's also important for bidders to know the starting bid (the price at which the auction begins) and the reserve price (a higher price, below which the owner is not yet obligated to sell the property).
Inspection
A real estate auction follows an inspection period, during which prospective bidders may physically inspect the property. This is an important follow-up to the research process and gives bidders a chance to check for any problems or note the features they think give the property value. An inspection on auction day is a bidder's last chance to decide against participating in the auction.
Registration
In order to bid at a real estate auction, each bidder must first register with the real estate company handling the sale. Registration consists of providing some basic personal information and showing proof of identity, such as a driver's license. Some real estate companies allow bidders to register in the days or weeks before an auction, while others register bidders on-site. In either case, registration is important to prevent fraudulent bidders from participating.
Bidding
Registered bidders receive a bidder's package when they sign in at the auction site. This package includes information about the property and a bidding card, which can be as simple as a cardboard plate with a large number printed on it. The number serves to identify the bidder and prevents confusion during the bidding process. Once a representative from the real estate company has assembled the bidders and introduced the auctioneer, the bidding begins. The auctioneer states the opening bid clearly, or announces that the bidding is open, and waits for a bidder to raise her card and state an opening price. The auctioneer then states a higher price until another bidder raises her card, which signifies her commitment to buy at that price.
If You Win
When no bidders raise their cards to meet the auctioneer's next stated price, the last person to bid wins the auction at the most recent price. This bidder's number has already been recorded by an agent of the real estate company. The auctioneer states that the property is sold, restates the price and closes the auction. If you're the winning bidder, you'll likely be approached by an agent of the real estate company who will issue you additional paperwork or request a cashier's check. The auction guide will indicate the amount required for the winning bidder's deposit). The final step is to sign a purchase agreement. DHartman