Buying at Auction
January 27th, 2007 . by Brecht PalomboAuctions come in many forms, and there is no reason why you shouldn’t be able to participate in one. Some estimates predict that as much as 40% of real estate will be sold at auction by the year 2010.
In order to be a successful bidder at a real estate auction you should.
- Make sure you have your financing arranged
- Evaluate your prospective purchase
- Read and evaluate all material about the property that is available
- Determine what the value of the property is to you
- Determine your ability to abide by the terms of the sale
- Make your deposit funds available
- Bid away!
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Frequently Asked Questions
Common Real Estate Auction Questions
Buying Real Estate at Auction is becoming more popular every year. Here are some frequently asked questions about how to buy Real Estate at Auction:
How Can I Participate In This Real Estate Auction?
To be eligible to bid, a potential buyer must register with our office either prior to the auction or the day of the auction. All bidders must post a pre-determined amount of money in the form of a certified or cashier’s check. Contact our office for the amount of the deposit as each auction sale is different. Personal checks may be accepted in certain situations, but you must contact our office prior to the auction. If you are not the successful bidder, you get your check back immediately. If you are the high bidder, that check becomes your hand money; you sign an agreement of sale incorporating the auction terms.
Does The Owner Have To Take The Highest Bid That Day?
It depends. Almost all of our real estate auction sales have “reserve” numbers that are determined by the seller. The reserve number is not disclosed before the auction. If the high bid the day of the sale exceed the seller’s reserve number, then it is automatically “confirmed” and the buyer must proceed to the closing. If the high bid does not meet the seller’s reserve number, the seller will immediately decide whether to accept the lower number.
What Is Meant By “Suggested Opening Bid?”
The suggested opening bid is the number that the auctioneer considers a fair starting point for the oral auction. The suggested opening bid is not the seller’s “reserve” number.
If I Am The High Bidder, Is My Bid Contingent Upon Me Obtaining a Mortgage?
Not typically. Real estate auction sale are not usually contingent upon the buyer obtaining financing. Most of our auction buyers are pre-qualified by a mortgage broker or bank and know that they qualify for such a purchase. Should the buyer not be able to obtain financing and not close on the property, they forfeit the deposit money. Contact our office with any financing questions.
If I Am The High Bidder, Is My Bid Contingent Upon Any Inspections?
Generally no. Most real estate auctions are “as is, where is”. Potential buyers often have inspections done before the auction. We will make the property available at any time for any type of inspection. If you want to bid on a home but only if it is with an inspection contingency, please contact our office. The seller can make the decision to allow certain inspection contingencies and this has been done in the past.
Can I Purchase An Auction Property Prior To The Auction?
Sometimes. If a buyer make an offer prior to the auction sale and it is a number acceptable to the seller, the seller can decide to sign an agreement of sale and the auction will be canceled. This is a common occurrence and not out of the ordinary. Certain contingencies can be attached to the agreement of sale by the buyer in this situation. Contact our office for details.
What Is The “Buyer’s Premium?”
The Buyer’s Premium is an amount added to the high bid and incorporated into the total selling price. The amount of the Buyer’s Premium is announced prior to each auction sale.