Real estate auctions have seen a dramatic growth in recent years, in the United States. The advantages that an auction has, like a quick and an efficient way of getting cheap properties, has made it a preferred mode of buying and selling real estate. According to 2004 data, land and agricultural real estate witnessed the fastest rate of growth in sale through auctions (14.7%), followed by residential and commercial real estate with a growth of 14.1% and 11.1% respectively.
Successful Bidding Tips
Gather as much information as you can about the property you are interested in buying. For example, get specific information like the size, amenities, location, and the opening bid. Then, research the area in which the property is located. Find out about the benefits of living there and its drawbacks, and compare the prices in that location as compared to those in the other parts of the city or town. Also, look at properties similar to the one you are planning to buy. This will help you to evaluate the property against your needs, and also plan the bidding strategy.
Attend Local Auctions
Attending local auctions will help you to better understand the value of the property in that area, and will also provide you an idea of how an auction is conducted. Observe who all attend the event, and how they bid. You may be up against the same people when you plan to do so, and hence, knowing their bidding pattern may give you an edge.
Set your Budget
Real estate investments involve huge financial transactions. Hence, it is very important to arrange your budget well before the vendue date. If possible, set an uneven bidding limit. For example, instead of setting the limit at USD 610,000 keep it at USD 611,000. Sometimes, a bid higher by USD 500 might help you to outbid your fellow bidder and win the auction. While deciding on the budget, take into consideration extra costs like stamp duty, legal expenses, and the fees of realtors or other agents that you may employ to help you with the purchase.
Focus on the Legalities
It is best to be clear about legal issues in case of real estate. Try to read through all the paperwork related to the property. Get your attorney to go through the contract of sale. Contact the agent beforehand and get a copy of the related documentation. In case of any confusion, get the agent to clear your doubts. If possible, also get the building and pest inspections done for the property before the day of the auction.
Be a Confident Bidder
Although, most bidders shy away from being the first one to raise their voice, for an auctioneer, the person who starts with the bidding process always comes across as one who is genuinely interested in buying the property. Such a person has an edge over the others in case the property does not reach its estimated value through bidding. In case there is a possibility of negotiation, an auctioneer may always turn to those, he thinks are seriously interested. It is very important to verify that the contract for sale obtained by you, is the same one being used on the day of the vendue. Also, be careful about any recent changes in the contract.
Control your Bidding
Don't get carried away with the process. Always be within the bidding limit you have set. There are instances when people feel emotionally attached to the property. In such a scenario, they may send their attorney or a family member to the auction, as they fear that they may get into a bidding war and well exceed their limit. If such a need arises, ensure that the person representing you has a clear understanding about the process and your priorities.
A confident demeanor goes a long way in sealing the deal, as it should be remembered that it is not just about the money, but also the approach and attitude of a bidder that can tilt the scale in his favor.
Disclaimer: This article is for reference purposes only and does not directly recommend any specific financial course of action.