Real Estate Auctions

Real estate auctions are great fun and a really good way to look for properties. As well as the auction itself there is often a festive atmosphere with other entertainments, such as food and drinks, and live music. All of this helps the auctioneer achieve his goal: happy people are likely to spend more. This means the auctioneers get paid more, because they get a percentage and often also a bonus for high level of sales.

So be aware of these things when you attend an auction, and don't get so caught up in the festivities that you lose common sense. Be prepared with information, and bear the following hints in mind:

It is most important to inspect the property rigorously. The auction company will usually hold open houses leading up to the auction, or you can contact the estate agent and ask to be shown the property privately. Auction companies will usually cooperate with the agents, who may bring them a buyer, and pay the agent a commission if this happens. Some properties which are suitable for pulling down are sold cheaply by auction companies; others may have lots of faults. Therefore you must inspect carefully before you decide to buy.

Make a careful assessment of the property's market value by checking out what similar properties have sold for recently. Don't rely on a list price, which is not necessarily the same thing as market value.

Decide what your maximum bid will be. You are hoping for a good price, which you have determined from your research into the property's market value. You are not necessarily going to bid up to the market value, however, and you need to be very careful not to let the auctioneer woo you, confuse you or scare you, or the atmosphere of the event excite you, into going any higher than you originally planned.

Have a good look at the paperwork that go with the purchase if you win; check out environmental reports, legal description, property tax statements, lot survey and the sales contract.

Have a deposit ready. If you are the winning bidder, you will be expected to pay a deposit. Before you can bid, you have to register with the auction company before the auction, and you must show them proof that you have the funds for the deposit. The amount required for a deposit varies from auction to auction. Once you have done this you will be given a bid card. When you use this card during the auction, the auctioneer knows you are approved and registered. If you don't have it, he will not accept your bid.

Check out financing. Auction companies frequently have their own financing arrangements for property sales, so find out if this is the case for the one you are interested in. If there is financing, ask about the qualifying standards and terms. If there is no financing, then ask the auction company how much time they would give you to arrange your own financing, should you win the auction. Government agency auctioneers usually expect buyers to pay cash, whereas private companies usually do not.