I have recently made the decision to start a career in Real Estate. Growing up in Ames I know a lot about central Iowa, from all the cool new spots to eat to the secret gems within the area. This
Bidders Checklist 5 Ways To Win Online Real Estate Auctions
By Peter Miller
Look around your neighborhood and increasingly you may see homes being sold through online auctions. Long a staple of the commercial real estate marketplace, antique sales and high-end art transactions, auctions today are gaining traction as a quick and sure way to buy and sell residential real estate.
The catch? Not every bidder can win, and some bidders seem to do consistently better than others. So what are the tricks of the trade, and how can you increase your chances of a winning bid? Here are five basic strategies that can help you get an edge.
1. Know your limits
The goal is not to win at any price; it’s to win at a price that makes sense to you.
Todd Gladis, senior vice president with Auction.com, explains that bidders who “come prepared, have valued the property and stay disciplined in their bidding are the ones most likely to be satisfied whether they come away the winning bidder or not.”
Finding the right price depends on several factors:
Is your intent to use the property as a primary residence or as an investment?
If the property is to be an investment, what can you reasonably expect in terms of rent or a future sales price?
How do similar properties in the same area compare?
In addition to the purchase price how much cash should you have in reserve for costs such as repairs, upgrades, vacancies and marketing?
2. Review all documents and information
If the property is being offered on an absolute basis, this means it will be sold then and there, regardless of how little is bid. If there’s a reserve or minimum bid, then the winning bid must meet or exceed a required price.
Be sure to find out these and other details before auction day.
3. Tour the property
Auction homes are typically sold “as is,” “where is” and “with all faults and limitations.” These expressions mean if you win the property it’s yours as it stands. For this reason you should take every opportunity to physically see the property before bidding.
“Bidders should always do their homework and research the property before the auction,” Gladis said. “The best way to prepare is to attend an open house or property showing, and review any information and/or due diligence provided on the property.”
What if you can’t physically enter the property? With single-family homes you can drive past and look at the yard, the paint and the roof from a distance. In addition you can go through the data made available through the auctioneer and see if there are any recent inspection reports. If you find the information insufficient — or have a baseline requirement to physically see the interior of a property before bidding — then consider other properties.
4. Show them the money
To bid successfully you must have funds in place — either all cash or the ability to get a loan and complete the transaction quickly.
If you prefer financing, be sure to qualify before the auction and review the terms of any proposed loan with care:
How much down is needed?
Does the lender require an interior appraisal?
What is the interest rate and what are the fees required to close the deal?
Can you prepay in whole or in part without penalty?
5. Make a deal
You don’t have to be a deal-making genius to win an online auction.
Traditional home buying offers routinely include a range of contingencies for home inspections, financing, appraisals and other factors. Two competing offers could have the same price but wildly different terms and conditions. Battles back and forth between buyers and sellers – and between competing buyers – could go on for days before a final agreement is reached.
With online auctions the bidding is very simple: The seller has set out the terms, and buyers are invited to bid on a specified date. The core variable is price.
What’s most important is to bid no more than you think the property is worth.
Peter G. Miller is a nationally-syndicated real estate columnist. His books, published originally by Harper & Row, sold more than 300,000 copies. He blogs at OurBroker.com and contributes to such leading sites as The Huffington Post and Auction.com.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.