If you want to get the most value for your hard-earned money, buying property at auction is a good way to start. But, not all properties sold in auctions are hidden gems. There are lots of drawbacks too. So, here are some tips to help you get the best property at an auction:
Ask the auction house if it is a foreclosure auction or a tax lien auction
You may ask, “Why is it important to determine the type of property auction?” Remember that when a certain property is being auctioned off, it means the owner was having some kind of financial problems. If it’s a foreclosure, you may have to pay for a second mortgage and hefty interests and fines. If the owner defaulted in tax payments, ascertain the liens against the home and other conditions that you may have to comply with. Then, there’s a fact that it is the unpaid tax authority that took the property in tax liens, while the banks or other lending institutions seize foreclosed properties.
Visit the open houses before the bidding date
It is important to walk through the properties ahead of time to check the deferred maintenance problem. You will have an idea of the property’s repair costs and the true value of the property and avoid any unpleasant surprises. Take a builder or an architect with you to find out how much the repair or remodelling can cost, especially if it is in poor condition. So, always inspect the property before bidding to know if it is worth the maximum amount of money you are willing to bid.
Do your research when buying property at auction
If you are serious about buying a property at an auction, visit other auction houses, read auction catalogues. Compare the price and condition of the properties on auction with others with a similar location or price. Ask about the real cost of the property, instead of just relying on the guide price of auction which is often set very low to attract bidders. Not only that, you can experience the “sugar rush” when you see the property for the first time, but if you don’t compare the prices, that level of happiness may not last very long.
There are well-priced properties in great locations so be sure that your financial preparation is worth it. Set aside some time to learn more about the paperwork required the terms and conditions of payment and the value it would add to your financial portfolio.
Prepare your finances prior to the auction
When you go to the auction house, you have to bring your cashier’s check or cash to pay the auction holder, bidding fees and earnest money deposit on the auctioned property; before you leave the auction house. Since many auction houses require cash, it is important to ask the auctioneers if they allow financing. If they do, be sure that you already prequalified for refinancing or any other loan ahead of time.
Some auctions require at least 10% deposit and you have to pay the remaining 90% in a matter of weeks. If you need refinancing, discuss all its financial implications with NSW Mortgage Corp. It offers fast refinancing and second mortgage approval within a few hours.