We have all heard about real estate auctions and how good they are for any investor. It is a highly effective way to sell real estate. Similar to a regular auction, a real estate auction is an intense marketing process wherein there is a property for sale – by way of competitive, open cry bidding. 2013 marks the beginning of a promising year for real estate investors. In such a scenario, auctions will be many in number and highly beneficial to all the parties involved.
How will Auctions benefit Sellers?
- It is forecasted that the year will witness an low-average price stabilization in the first quarter, thus attracting numerous buyers
- Disposal rates will be quick. This implies that maintenance, taxes and other long term carrying costs will be considerably reduced
- Optimum valuation ensures that properties are placed at profitable values
- Sales will be accelerated
- Visibility and interest in the property is bound to increase due to aggressive marketing
- Sellers can step out of the ordeal of negotiating
- Potential buyers have a mandate to pre-qualify for the process of financing (if required)
- Sellers can be in charge of when the property sells. There are no unnecessary delays and uncertainty
- The need for unscheduled house showings is eliminated
How will Auctions benefit Buyers?
- Competitive bidding ensures that properties are placed at fair market value. This leads to smart investments
- There is commitment on behalf of the seller which is beneficial to the buyer
- The year will see plenty of multi-property auctions enabling buyers to see many prospective properties at the same time and place
- Buyers are in charge of the purchase price
- Irrelevant, taxing negotiation periods are eliminated
- The time to purchase property is reduced
- The dates at which the property closes and when it will be purchased is known to all
- There is an equal chance for all prospective buyers
- Due diligence ensures that buyers have in-depth information about the properties of interest
Keeping in view numerous foreclosures that are predicted in 2013, thousands of investors and buyers are seeking to piggybank on the biggest deals. Then there are those who are new to the trade. Jeff Adams recommends a few thumb rules that will take you a long way into getting acquainted with real estate auctions. And what better way to start than with the promising year 2013.
Real Estate Auction Guidelines 2013
- Keep Track of Financing
It is worth keeping in mind that most auctions do not have the option of financing. Since the final bid amounts may reach up to tens of thousands or even millions of dollars, financing remains out of the questions. Therefore, prospective buyers must carefully examine whether the property in question is within their buying capacity. Other sources of funds, if available, may be used by the winning bidder.
- Due Diligence
It is rightly said that there is no end to the amount of information one can gain. This is especially true when it comes to big risk deals such as real estate auctions. The key is to have all necessary details about the property before the auction begins. Property Information Packages are a good way to do this. Preliminary online research can also go a long way.
- Complete Understanding of Terms
It is obvious that as an auction buyer, you are willing to buy the property of interest in its prevailing state, inclusive of flaws. Keep in mind the “As Is, Where Is” which is a fundamental term used in the contract. It literally means that once the property is sold, the responsibility of repairs or damages does not rest in the hands of the seller. This includes everything, from issues as small as a defective door-lock to major concerns such as the location of a property near train tracks.
- Keep Emotions at Bay
It is human to lose focus by way of giving in to one’s emotions. But when it comes to mammoth monetary deals such as bidding for a house, it is best to keep emotions at bay. Evaluate decisions using your head, not your heart. Always start with a budget in hand and stay committed to the figure. Remember, giving in to a moment of emotion can cost you a lifetime of investor reputation and hard work.
Perhaps the best aspect of real estate auctions is the absolute freedom available to both buyers and sellers. In a scenario where property markets promise a bounty to every intelligent investor, it may be easy to lose focus and go overboard. But always remember these guidelines and stay grounded. Rest assured, you will be an investing champion – in 2013 and beyond!
