Property auctions can be a great place to find fantastic real estate bargains. However, working a property auction requires a few extra skills and knowledge. Here is a quick start guide to help you navigate your first property auction.
- What is a property auction?
A property auction is exactly what it sounds like. It’s a place where residential and commercial buildings are bought and sold. It’s an auction and it works like any other auction. Buyers bid on a property and the highest bid wins.
Property auctions are generally divided into residential or commercial. And in order to attend you generally need to be approved.
- Why do you need to be approved before attending an auction?
Imagine someone bidding on a property you’re selling at an auction and when the day is done and the auction is over, the buyer cannot actually afford the property. It would be unfair to all those who bid on the property and certainly a misfortune to the person who is selling the property. Being approved prior to the auction helps to avoid this unnecessary dilemma.
- Why do people buy at an auction?
Price is the main motivator. You hear tales of people walking away from a real estate auction with a million dollar home that they bought for a dollar. That kind of deal doesn’t happen. However, you can save an abundance of money on an auction home.
- How do you prepare for an auction?
Most often there is a listing available to auction attendees before the auction. Use this list to research the homes before you attend the auction. Make sure it’s in an area that you want to live or can rent in. Make sure the exterior is up to par and that as far as you can tell the home meets your goals and needs.
Preparation is important because you can buy an auction home and end up with a ton of unexpected expenses and surprises. Doing your research ahead of time will help mitigate these surprises.
- How do you find out about auctions?
Auctions are listed in the newspaper, generally. It also helps to build a network of fellow property owners, auction attendees, real estate investors, real estate agents, and mortgage brokers. Real estate attorneys are helpful too!
Buying a property at a real estate auction can save you up to 60% of the home’s value. It’s a great place to find true bargains. However, proper preparation can also prevent unexpected surprises. You may want to attend an auction or two first before getting in on the bidding game. It’s sure to be an educational experience.
- Property Auctions – Numbers vs. Emotions – Your Guide to Staying in Control
Property auctions are a fantastic way to get a great bargain on a home or a rental property. However, they can also be tremendously overwhelming. There’s a lot of information, a lot of excitement, and a fair amount of pressure to get the winning bid. All of this commotion and chaos can send logic right out the door.
It’s important to reign in your emotions, as fun as the roller coaster may be, and make buying and bidding decisions based on the numbers and logic. Here’s how to keep things in check at your next property auction.
1. Before you ever consider attending a property auction, know your goals and what you’re looking for. Are you looking for a property to rent? A property to fix up and resell? Are you looking for a property to live in? How long will you own the property? And perhaps most importantly, how much do you have to spend? If you’re looking to buy a rental property, how much do you want to make on the investment?
2. Know how much you can spend, write it down on a piece of paper and take the number with you. You may want to write down two or three numbers. How much you’d ideally want to spend and how much you can spend and still meet your financial and investment goals. Knowing these numbers will help you bid accordingly. Take the paper with you and pull it out before you’re getting ready to bid as a reminder.
3. Research the properties before you attend an auction. Make a note of the properties that fit your goals. Research them to find out how they fit into your financial and investment goals. Come up with a top limit of what you’d be willing to spend on each property and commit to sticking to your budget.
Make sure you research the property values around the homes, the neighborhood features, the schools, the taxes and also the condition of the home.
4. Make sure all your funding arrangements are made before you attend the auction. This will help you bid with confidence.
Be prepared to walk away. No deal is better than a bad deal or an investment you really cannot afford or doesn’t meet your needs. An auction is an exciting process, however, it’s important to look at it like a tool not a competition. If you view it as a tool to get what you want, then you’ll walk into the auction confident and prepared.
Kirk Rickman and Victoria Carter
TwoMoveYou Real Estate Century 21 Brighton
6 Ironwood Cres, Brighton, ON K0K 1H0