If you have exhausted viewing various listings in search of a new home or investment property, but you cannot find one that suits your budget and style, consider going to a property auction to acquire your future property. The key to a successful foray into the world of real estate auctions is to know what you are doing. This is not the same arena as an ordinary real estate market.
You must know the nuances of a real estate auction platform before you dive into its crazy world- a world that can be stressful because of the competition but can deliver a gold mine if you play your cards right. Here are some of the best tips, which many newcomers don’t consider. Having these prepared before you get into this high-stakes environment increases your chance of winning a property auction.
Be Fully Aware of Your Financial Capacity
This involves opening your books or checking with a financial advisor to truly understand your wealth and capacity to pay. You have to be aware of how much money you actually have because it would be useless to start bidding for a property that you cannot afford to pay for right from the very start.
If you need to apply for mortgage approval, get it done before going to any property auction. In order to secure a house during the day of the bidding, you have to bring your written approval and be prepared to make a deposit of around ten percent of the purchase price.
Related: How to Buy a House at Auction Without Cash: An Investor’s Guide
Check the Sales Contract with Your Lawyer Beforehand
Beneath the surface of a property being auctioned are legal issues. There are things you want to sort out and deal with before you buy the property. Be sure to get a hold of the copy of the sales contract days ahead of the auction, so you can ask your attorney to peruse and review the terms. During that time, your lawyer could advise you regarding the possible issues and risks that you have to face in considering this property.
If you have your heart set on it, the lawyer can also give you advice on what you can do to mitigate those risks and protect yourself. On top of that, your legal adviser can point out some details, which you can use as your bargaining chip. This could be in the form of a lengthier settlement period, a reduction in your deposit, or added provisional considerations.
Secure a Copy of a Professional Building Report
Don’t forget that once you commit to an auction, it is a legally binding process that you can’t just back out from because you found out some new issues that you don’t like. Thus, it is crucial to do these steps even before the auction date, so you will be informed about any potential issues. It is dangerous to merely rely on your intuition when it comes to purchasing investment property as big and as important as this.
No matter how tempting a house is, you have to know what you are getting yourself into. It is the only way to keep your monetary investment truly protected. It is critical to get the building inspected by a professional who can then get this report ready for you. Without getting to know about the structure and foundation of your house before, buying it is very dangerous.
Go Beyond the House Condition
This is a critical step, but it is often the most overlooked. Prior to an auction, always take note that there is an open house where potential buyers can take a good look at the investment property they are eyeing. However, things do not stop because you have to go the extra mile and check the neighborhood or area where the house is situated.
Pass through it during different hours of the day to get the true feel of the environment from checking the business of traffic and the actual noise level. Typically, real estate agents who are adamant about selling the house opt for the best time of the day. If you go there and check on your own, you might be surprised at what you’ll discover. Don’t forget this crucial step because either you and your family or your tenants (if you plan on renting out the auction property) will spend a lot of precious time in that neighborhood.
Do Not Forget to Present a Legit ID with Your Registration
You have to register with a selling agent days ahead of the auction in order to be given a bidder’s number. This can be done during the open house or whenever you come to check out the property. It can even be done on the day itself. Remember to bring a valid government-issued ID with your contact details. This will save you a lot of hassle if you ever end up winning the bidding.
Visit Various Real Estate Auctions
Bidding is not as easy as it seems and it is actually a fine art that needs to be honed. To get a feel of things, attend several property auctions to see how things are done. The property auction of your dream house shouldn’t be the first auction you attend. While in your practice auctions, stake out the scene and observe what the winning bidders do and have in common. Then, try to emulate the things they do, so you can confidently state your claim in your dream property.
Set a Limit and Stick to It
Never ever go beyond your limit. Check your ego at the door of the property auction and refrain from getting into a bidding war. Do not exceed your borrowing capacity because this can set you up for financial ruin. This is the reason why the first step in this guide is knowing exactly how much money you can afford to fork out. Be vigilant and committed to sticking to that budget.
Avoid Being Emotional During the Auction
Successful bidders do not wear their emotions on their sleeves. It is best to keep a poker face to show your power and confidence. If you do not have that quality in you, consider appointing a buyer’s agent to do the bidding on your behalf. It may not be as fun anymore because you don’t get to feel the rush, but it can get you the investment property you desire if you’re the emotional type who can’t hold it together. Just be sure to send an authorization letter to your chosen bidder. But if you can keep your emotions in check, then go all out and have fun bidding.
Follow each piece of advice listed here and you will be well on your way to getting that property you desire in an exciting auction setting. It is best to always be educated and knowledgeable so you can make informed choices and calculated decisions that you will not live to regret.
This article has been contributed by Julie J. Neel.