Tips for Planning a Successful Real Estate Auction Purchase
Posted on: 11 March 2016
Although it's certainly possible to get great deals at real estate auctions, you'll have to put in some time and forethought in order to come out of the event ahead. Impulse buys are a lot less likely to turn out well than informed bids. You'll need to know what your top prices are for any property that you're considering placing a bid on, and for that you'll need to do your homework. When you've found an announcement for an upcoming auction, it's time to get acquainted with the offerings and whether any of them hold interest to you. Then you'll need to start preparing specifically for that auction (or the one property you're interested in). Here are three tips to help you plan effectively for a great real estate auction buy.
1. Estimate the market value
As you're doing research on the real estate market, you'll come across online resources that will help you start to get a sense of how much certain properties are worth in the current market. To help you pin down a more accurate estimate, you can use an online tool that can calculate an approximate property value based on the property's history and the state of the current market. Examples include the calculator found at Zillow or the one at Bank of America. All you have to do is enter the address of the property.
2. Compare market value with auction estimate
Because foreclosure auctions are something of an aberration from the conventional way of buying and selling properties, the amount your preferred property will sell for at auction isn't necessarily comparable to its normal market value. So if you're going to a foreclosure auction, check out the estimated going price for that property at such an auction. This will help you put the value of the property in perspective as you plan your bidding budget.
3. Remember it's probably not perfect.
If you go look at the house before the auction, you may be able to get a general idea of how much work it needs before it's sellable (or livable). Even if you can't get a tour of the inside, you can get a look at the outside and catch some telling details. For example, if someone's currently living in the house it's more likely to be in livable condition than if it's abandoned.
If you're unsure if someone's living there, check for cars in the driveway, lights in the windows, and trash cans. Bring your general contractor along if possible to help estimate repair costs of any visible damage. Subtract probable repair costs from your planned highest bid.
These three tips will get you on your way to planning a great auction purchase. Remember, once you've set your planned highest bid, don't be carried away by the excitement at the auction. There are other, better deals out there waiting to be found. For more tips or assistance, contact companies like Bob Parks Auction Company LLC.
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