Real Estate Auctions: Will It Work In Your Favor Or Not?
A great deal of real estate properties are put on auction for the belief that the buyers could be carried by the hype of the bidding wars which in return, could lessen the devaluation of the properties. In most cases, many buyers jump into the hype and place bids that are beyond the prices that they first set and the prices that they could practically afford.
However this is not true in all cases. There are real estate properties that could sell even at the lowest prices available. If no one bids on the property, the owner might even have a deficit. If there are too few interested in the property, on the other hand, the owner might not get his expected value but the buyer will have a property at a much lower price. In general though, foreclosed real estate properties that are being auctioned are sold at a discounted rates to leave money to the new homeowner for repairs and refurbishments. Also, banks and mortgagors have no more interest on profiting from such sales. They only need the return of their investment or security of low deficit due to the cost of maintenance and other expenses over the property.
If you are interested in buying real estate from an auction, you should be very careful while bidding. Sometimes the highest bid is not the final price of the house. Remember that the auctioneers have to get a commission for their service. On the other hand, if you are bidding on a foreclosed house, you don't have to give really high bids to get the property. Allow yourself some money to cover for some unsolicited expenses after buying the house.
Nearly all auction houses have predetermined percentages over the houses being sold to be received as payments. When bidding, calculate this amount and add it to the highest bid you are willing to bid. For example, the typical commission is around 5%. So if you are buying a real estate property at a price of $100, 000, expect to pay a little more than that.
The main selling point of real estate at auctions is getting the property you want at a reduced price. So be sure to get that. If the price is not giving you that advantage then forget about the property.