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Challenges Of Bidding At A Real Estate Auction

Thursday, May 5th, 2016

Going to a real estate auction could be the riskiest or best business venture you have ever entered. You could be bidding on the most profitable real estate purchase possible. Real estate auctions are not guaranteed to produce a bargain, however. You have to know what you are bidding on and what the market value is to get good deals. Bidding on real estate without knowledge of how the process works could have you paying more than the property is worth. You can follow several tips before bidding at a real estate auction to help ensure you are investing in a profitable property.

Arrange financing before bidding

Knowing exactly how much you can pay is a must before getting caught up in the excitement of an auction. If you are not careful, you may agree to a bid you cannot pay. One of the challenges of bidding at a real estate auction is having the funds available at the end should you be the winner. Will you be using your savings or have to borrow from the bank? Many times you have to be able to produce a percentage of the bid in cash or a cashier’s check right away. You will need to know if you are going to qualify for a mortgage or have the cash in the bank to back your bid.

Search for suitable real estate

Another challenge is finding the right property to bid on at a real estate auction. Finding the right real estate will take some research on your part. If you are looking to make an investment, you will need to know that it can provide a return. If you are looking for a new home, then you will need to know if it fits your living preferences. You can find the properties going up for auction online through real estate auction companies. The advertisement will let you know when and where the real estate auction will take place.

You can research the real estate itself by visiting the property and getting a feel for the neighborhood. Do not just go by the information listed in the real estate auction catalog, but check out the property and determine the condition yourself. The previous owners may not have been able to afford upkeep or maintenance expenses on the property, so it could need major repairs. Visiting the property will give you a better understanding of what you are bidding on and what needs to be fixed.

See if tax liabilities or second mortgages are due on the real estate

Continue your homework by finding out what the laws in your state are regarding foreclosure and auctions. Find out if there are any tax liabilities due or if you will be held responsible for a second mortgage taken by the previous owners. If there are taxes due on the real estate, the IRS will still collect them. As the new owner you could be responsible for those taxes.

Know the market value of the real estate before bidding

Compare the value of the property against similar properties in the area to ensure you are bidding within a reasonable range. You can check with a real estate agent in the area if you are not sure how to complete this process. This research will let you know what your maximum bid should be at the real estate auction.

Following all of these tips and doing research should reduce the number of challenges you will face on the day of a real estate auction. If you want to learn more about attending a real estate auction, contact the experts at High Plains Auctioneers. Call us today at (806) 244-6776 or Contact Us by email for more information. You can also view our upcoming auctions to see what we currently have available.