Property auctions are one of the best avenues to score that dream real estate investment but why are there still a good number of people who feel apprehensive towards it? Misconceptions are definitely to blame and today we’re about to set the facts straight and make you see the light.
Misconception: “Assets sold in auctions are those that have been foreclosed.”
Although it is true that many assets sold in property auctions have been previously foreclosed, to generalize them would be wrong. Owners and brokers make use of the venue for other reasons too. First, there’s the immediacy. Heirs will sell in order to be able to divide the estate in cash, for example. Second, it offers a good market. Investors who have found themselves in a slow economy may use it to hasten their disposal and earn.
Misconception: “You can always score a property for lower than what it’s worth.”
One of the biggest charms that an auction holds is its ability to let buyers get hold of an item for lower than its actual market value. But this is not a guarantee for everyone. If you don’t do proper research, you might end up in a bidding war and get caught in an emotional and financial battle. In the end, you pay more. This is also the reason why setting limits is crucial.
Misconception: “You can deal with your financing after you’ve won the bid.”
You’ve won the bid. Congrats but it doesn’t end there. A legal and binding contract lies therein and if you cannot comply then you’ll lose the rights to the acquisition. Most auctions will demand an upfront security deposit and down payment. The balance shall be payable in installments across a period of time. Failure to comply will make your bidding efforts futile so make sure that you’ve got the money before you even bid.
Misconception: “All auctions happen in person.”
Many do but not all. Since the emergence of technology and the internet, online property auctions have become a thing too. They’re fast and convenient and gets the job done just as much. Cool huh?
Misconception: “You don’t get to see the assets being sold beforehand.”
Before the actual date of property auctions, a brochure or newsletter is often given out to showcase and list down all the available assets at hand. Use this chance to run a background check on the items that you wish to buy. It’s okay and totally advisable to visit them even or have a surveyor check them up.