Most real estate investors have considered purchasing property at an auction. In fact, auctions have become very popular in recent years. There was a time when only seasoned investors bought properties at auctions, but the information provided on the internet these days has made it easier for more people to take advantage of the deals that can be found. Let’s review five key things you should know prior to moving forward with your first auction.
Types of Properties You’re Likely to Find
Many of the auctions with live auctioneers involve foreclosures. The regulations often vary by state, but the properties are likely being auctioned because a borrower has defaulted on mortgage payments. In recent years, nearly 600,000 homes have gone into foreclosure across the United States, annually. While there are some people that are able to find a solution before losing their property, that’s usually not the case. In addition to live auctions, there are also online auctions. These have become popular because more people are comfortable with online transactions than in years past.
Considerations When Buying a Foreclosed Property
It’s common for auctions of foreclosed properties to take place in county courtrooms and it’s not as glamorous as one might imagine. However, there are some auctions that take place in large venues, such as hotel conference rooms. Typically, there are no upfront costs or fees for attending an auction, and they are often open to the general public. For starters, you can search for auctions near me Raleigh, NC locals are raving about to find out where they are held. You should be prepared to see dozens, if not hundreds, of properties available during an auction.
If you end up winning an auction, there won’t be a lot of time to waste. You’ll need to keep the ball rolling and move quickly. In many cases, you’ll need to complete documents and provide them along with the payment within hours of winning the auction. You should also be aware of the buyer’s premium, which is the auction company’s fee.
Importance of Conducting Research
Before you decide to attend an auction, you’ll want to do your research about the processes and rules of that particular auction. It’s important that you understand what’s involved because it might be difficult to undo a purchase made. The kind of research that you’ll want to perform includes finding the property’s estimated value, whether or not there are any liens, and how much is outstanding on the mortgage. Some potential buyers choose to hire an attorney for assistance. You can also hire a title company to conduct title searches.
Properties Are Usually Occupied
In most instances, a home that’s being foreclosed on is occupied, which means you won’t be able to see the inside. That doesn’t mean you can’t take a look at the outside of the property. Just keep in mind that attempting to see the inside is against the law. It’s common for bids to include an “as is” clause, which means you’ll have to take care of any repairs that have to be done, which you won’t know about until after the property has been purchased. Some repairs can be quite costly. Many investors promote examining the outside of a property because it’s often believed that the exterior appearance is a good indicator of the interior condition.
It’s Best to Get Pre-Approved Financing
In most instances, you’ll have to pay in full right after the auction is over. When it comes to foreclosure auctions, they typically accept a money order, cash, or cashier’s check for payment. Depending on the state in which you live, there’s a chance that you can pay a portion of the amount due right away and then pay the balance within a predetermined period of time. You’ll want to ensure due diligence when finding out about the payment process so that there are no issues down the road. This is actually why it’s good to get pre-approved financing.
If this is your first time participating in an auction, you’ll want to be thorough in the questions that you ask about the process and what’s expected of you. Perhaps the most important aspect of the auction is making sure you don’t end up buying something that you’ll regret owning. Since you can’t view the interior of the property, there’s always a possibility of dissatisfaction. However, your due diligence will minimize the chances that you’ll be unhappy with your new investment.