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Posts Tagged ‘how to buy real estate at auction’
Auction Financing
Potential bidders in a real estate auction must be qualified financially in order to participate. At RealEstateAuctions.com, we’ve got an auction financing resource that is literally on the map, nationally.
Bank of America is our preferred lending partner and we couldn’t be more proud.
Bank of America is the largest bank holding company in the United States, by assets. The company operates in every state plus the District of Columbia.
What it means for the consumer is unequaled access to the best financing products available.
Because of the accelerated transaction process that typifies a real estate auction, buyers must come prepared to close. The seller promises clear title at closing, ample inspection opportunities and a price he or she will accept that’s often considerably reduced from a previous listing price. Therefore, bidders must be prepared to close.
This means that auctions are not a place for tire-kicking. Bidders must have cash or financing in place to close within 30-45 days. Winning a property at auction, then starting the real estate financing process, is not the recipe for success. Auction contracts provide for no financing contingencies, no closing date push-backs because of a lack of financing. Bidders unable to close on the specified date risk their earnest money and possibly even more. Sellers may seek additional compensation beyond earnest money from buyers unable or unwilling to close beyond.
With auction financing such a critical component, there’s really no better choice than RealEstateAuction.com’s preferred lender, Bank of America.
What distinguishes our relationship with Bank of America is not only the programs and rates available, but the people. Thomas Faille is Bank of America’s Number One Professional Mortgage Counsultant. That’s correct, he’s Number One in the entire Bank of America operation nationwide. He and his team are regular visitors to the offices of RealEstateAuctions.com, educating our auction specialist Realtors about the newest loan options. And of course, Tom and his associates also meet with our clients interested in financing for auction and non-auction real estate. You can’t beat that kind of personal service from the best in the business.
Be sure to have your financing in order before registering to bid at a real estate auction. We’d be pleased if you’d consider our preferred lender, Bank of America, but off course you’re free to select any lender of your choosing. You’d certainly be wise to compare programs from different lenders, however. It’s always important to get a second and even third opinion on important financial undertakings like auction financing.
Types of Auctions
Each event held by RealEstateAuctions.com typically features three types of auctions. Each is easy to define, understand and participate in.
Absolute Auction
Highest bid wins, regardless of price. Absolute auctions are usually the most exciting and well-attended of the day. Potential buyers are attracted to absolute auctions because of the possibility of landing a property at a bargain price. Sellers love absolute auctions for the buzz they generate and the competitive bidding that is almost sure to result. The result? Typically a happy meeting ground for both parties.
What a great feeling for a winning buyer to know that he or she outlasted fellow bidders and won a desirable property at a fair price, while the seller has absolute confidence that he or she has received true market value for the property in the purest form possible: direct, head-to-head competition.
Minimum Bid Auction
These auctions begin at a minimum set price established by the seller. The minimum bid is published in the brochure and announced by the auctioneer at the start of bidding for that particular property.
Reserve Auction
This type of auction allows the seller to accept, reject or counter the “winning” bid. Sellers may make this decision before the event ends or they may take up to three days to decide. This gives sellers protection that their properties will not be sold below a level they can live with.
To learn which types of auctions apply to each property, be sure to check them on this website. Printed materials, large-screen displays and announcements at the event will also provide that information. In addition, we’ll have plenty of helpful associates on hand to provide assistance, as needed.
Sellers, be sure to contact us if you’d like more information about which type of auction to choose for your property.
Reverse Auctions
Reverse auctions
The popularity of reverse auctions in recent years has increased, as auctions in general are becoming the preferred way of buying real estate and goods of all kinds.
As the name suggests, reverse auctions are those transactions in which the roles of buyers and sellers are reversed. In a traditional auction, also called a forward auction, buyers vie to obtain a property or service, with the selling price increasing as the buyers keep raising their bids in an effort to outlast each other. But in a reverse auction, just the opposite happens, with buyers requesting what they need, and the most they are willing to spend. Sellers then compete to undercut each other and to obtain the contract or sell/rent their condo or other property by reducing the price as low as possible.
Almost anything, including condos and cars are sold on eBay, the most well-known Internet auction site, and helped to popularize online, traditional auctions. And now reverse-auction Web sites are also becoming more common
Very often, it is goods or services being procured in the reverse auctions, but people looking for condos and other real estate can get good deals this way also.
When engaging in a reverse auction, participants seeking property or services are advised to determine first how much they are willing to spend. They then post their needs on the Web site, and how much they can afford to pay. They can then sit back and watch as sellers compete to get their business.
Reverse real estate auctions are increasingly being employed to buy or sell property, especially in markets with a glut of available properties and people just need to sell them, even at a loss. For instance, in Congressional testimony on the 2008 proposed legislative package to use federal funds to buy toxic assets from troubled financial firms, Federal Reserve chairman Ben Bernanke proposed using reverse auctions to price the assets. Like many other auctions these days, real estate and otherwise, reverse auctions are often done online. A prospective buyer posts a “request for quotation (RFQ)” to purchase a particular item. With real estate, this can be as simple as “I need to rent a condo, or buy a condo in Miami, and at most I can pay this amount.” Then people trying to sell or lease condos will compete to match that price or come in at a lower figure.
Reverse auctions are usually held in real-time to inspire dynamic bidding, usually resulting in rapid downward price pressure that would not be attainable otherwise.