As we enter a new year a lot of people are still wondering what is going to happen in the real estate realm. How soon will we recover? A year or longer? Because of these issues and shear volume of distressed properties, a lot of people are claiming that this year 2010 is the year of the real estate auction. We tend to agree.
That said there are some things you want to know before flinging yourself out there and possibly getting yourself in trouble at an online auction.
So we've devised a list of 8 things you want to do to prepare yourself for an online real estate auction.
#1 Contact the Auctioneer
Ask the auction company to supply you with information, over the telephone or email concerning specific properties as well as the online auction process itself.One of the things you want to do right away is to get in contact with the people that you'll be dealing with for this online auction. Who is that going to be mostly? The auction company! Visit their site and I highly recommend going ahead and calling them them. Do some research about the auction company.
* Do they have a good reputation?
* Do they close the properties they 'sell'?
Twitter, Facebook and other social media outlets are great for this type of stuff. Ask around - odds are you'll find someone who has done business with them in the past. One thing to keep in mind though. With competitive bidding there ARE sore losers out there. So if you get feedback make sure it is from someone you think is reputable themselves!
#2 Do Your "Homework"
Find out as much as you can about the property. Check first online. This is an online auction the auction company will try and put as much information online as possible. Call if you still have questions or can't find something.This one is really a no brainer. You're going to be spending thousands if not hundreds of thosands of dollars on this property or properties. Check up on it. Go down to the courthouse. A lot of information can now be found online, but you need to be motivated to research the property or you probably shouldn't be bidding on it.
#3 Inspect the Property
Take full advantage of any inspections conducted by the auction company or schedule a private site viewing. This will allow you or your representative to see what you are bidding on and help determine value and desirability allowing you to bid with confidence.This is one that you might think is another no brainer but you'd be surprised how many people buy 'in the dark'. This is not recommended. Most auction companies sell 'as is' meaning you're not going to have an inspection period post-auction. You'd better know what you're getting up front and bid accordingly. Auction companies should do their best to disclose any issues or problems with the property ahead of time because they don't want trouble during the closing process. That said it is up to you to read these disclosures and go take a look at the property yourself!
#4 Prequalify Yourself
This increases your comfort level by knowing your mortgage qualifications. This is especially important in today's economic environment. Even before you decide on a property to buy, you should prequalify yourself through your banker. There is generally never a mortgage contingency in a real estate auction. It is best to know you can pay for the property before you bid.In our current economic climate this one is important. Don't make the mistake of winning something at auction only to find that the bank doesn't want to work with you. At best this might only delay the closing if you have to ask for an extension. At worst the whole deal can fall apart and you have to give up your earnest money. Ouch!
#5 Participate in an Online Auction
Similar to the on location auction. Check to see if the auction company is running another online auction you can participate in. Get signed up and registered for that event and attend and observe one or more auctions online and familiarize yourself with the process before you bid. The online auction process can be confusing at first, so knowing what to expect is important, when your time comes to buy.
A lot of online auction companies work in a very similar manner to eBay - even if selling multimillion dollar homes. The important part is finding out how they are DIFFERENT.This one is more about your comfort more than anything else. How does the system really work? What fields do you have to fill out before placing bids on the system? What are the quirks in the system that might delay you from placing a bid when time is tight? Surprises are not fun - especially when you've committed yourself to a large six figure bid.
#6 Plan Your Bid Strategy
Determine your bid limit after examination of the property and all available information. Don't be afraid to bid early. Most other bidders will be willing to pay just as much as you. The one who bids the number first, wins that day.So you've seen the property, you know how much you're pre-qualified for, and you know who you're dealing with and how their system works. Now it is time to determine how you're going to bid. Some people like to jump out in front and try and scare off the other bidders by showing them how much you want this particular property and some people like to casually come over the top of anyone else that bids. The important part is that you know how you're going to bid and you know how much you're going to bid to and that you're comfortable with that if you don't win the property you want.
#7 Register To Bid
Most online auction companies require some sort of registration process before you're allowed to bid. Some require identity verification by some method. Find out what this is. Call and make sure you're comfortable with the amount of information you're providing and what the auction company will be using this information for. Remember: Due to the anonymous nature of the internet they are just as wary of you as you are of them. Seek advice and ask questions from other people or brokers who have participated in an online auction and get information about this Auction company.Not much to say here other than get signed up ahead of time. No one wants to miss out of a real estate opportunity because they tried to register too late. If you rush this you'll feel rushed for the whole process and you're putting yourself at a disadvantage from the start. Just take the time and get registered early on so it is one less thing you have to worry about.Upon completion of registration you will generally receive a bid number, terms of the sale, and other important auction day information (again check the auction company for exact details).
#8 Check for Required Deposits
If you are the successful high bidder at an online auction, you will be normally be required to affirm your bid with a digital signature or email reply and some sort of deposit. Check with the auction company for exact details on what type of money deposits are allowed and accepted (Generally a certified or bank check are required) and how to get that money to the company since it was an online auction.This one is all about being able to perform after you've won a property. This step will set the tone of the entire closing process. The auction company wants you to purchase the property but they don't know your financial situation. The auction company is trying to determine if you're going to follow through with your bid. You have to make sure that you follow directions after the auction to show them that you're a serious buyer. If it seems like you're not going to meet the post-auction requirements they will sell the property to someone else. Don't lose your opportunity to buy your dream house because you didn't follow the post-auction instructions.
REF: LA Times - Year of the Auction
Auctions can be stressful for the uninitiated. Online auctions can be confusing and stressful! Follow these steps and you'll be able to bid with confidence and have an enjoyable auction experience. Good luck bidding!
Carlton Jones
Rowell Auctions, Inc. Real Estate Auction | Land Auction | Online
No comments:
Post a Comment