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How To Prepare For A Day At The Property Auctions
Admit it. Unless you are someone working at the auctions house, it is very unlikely that you know exactly what will happen and what you need to do for a smooth day at the races. For the average guy, a visit to the auction house can be an intimidating experience. Professional bidders and auctioneers compete with each other at a fast pace to get the most for their own interest. It is a game that can have huge financial impacts for all parties involved. Here are some steps to prepare yourself for the event that you are so looking forward to.
Keep your budget in mind
it will be strange indeed if one walks into an auction house without a clear idea of how much they are willing to spend. But it’s even stranger to find that many people do exactly that! You have to work out your sums beforehand and have a specific figure in mind for your maximum bid price. Making a mistake by getting caught up with the frenzy can have grave financial consequences. Start low and gradually increase your bids. Never overbid due to competition.
Know what you are bidding for
Before an actual auction, you will be invited to open houses for interested parties to physically inspect the property. Make sure you make a visit in one of these open houses so that you will know exactly what you are buying. And get a professional inspector to accompany you for added measure. When auctioneers know that you have seen bad condition a house is in yourself, they know that you will be less likely be taken for a ride.
Appraise property value
You can surely expect the people organising the sale will make every effort to get the property valued as highly as possible. So don’t take number being presented to you literally. Remember that there is a big difference between what is a valuation price and what is a market price. Any investor worth their salt want to check out recent transaction prices of comparable properties in the area.
Scrutinize the documentation
We are talking about assets worth hundreds of thousands here. They can even go up to the millions. Putting this into perspective, you will want to have a look at all the documentation pertaining to the property in question. Get an attorney to help you if you are unsure of what to look out for. An experienced player will be able to pick out anomalies without skipping a beat. Documents to meticulously examine include the title deed, property tax records, terms of contracts, etc.
Prepare your deposit
In the movies, we see people walking into auctions without a care in the world and unknowingly make winning bids in a comedic manner. These do not happen in real life. Well, at least not in real estate auctions. You will need to register yourself and show proof that you have the funds to fulfil your winning bids. This proof usually comes in the form of a cashier’s order or banker’s guarantee depending on the operators.
Investigate the title deed
There are many types of complications that can arise from title deeds. The best person who can assist you if you are new to them, is a good real estate lawyer. The best way to protect yourself in case something unexpected does occur, is to sign up for title insurance. Check out the terms governing these insurance policies from your insurance agent if you wish to explore buying one.
Learn about financing
The basic instinct that you might have regarding financing could be to get a mortgage or to pay in cash. If you are getting a mortgage, remember that a lender would usually only loan a percentage of the selling price or property value, whichever is lower. And with the likelihood that you would be buying below value, your mortgage would most probably have a loan-to-value based on the purchase price.
Sometimes, auction companies will have already arranged financing from their own contacts. When that happens, do find out the terms and condition governing those financing plans. Even if a house looks like a bargain on paper, the interest you pay on it’s financing can kill off your returns and even take you into negative territory.