Gaining access to online auctions is one of the many perks of having a real estate membership, and it’s an advantage best capitalized. Given their web-based nature, these auctions are often made up of the most diverse and promising properties in the market. So, make the most out of them.
If you’re a novice when it comes to participating in online auctions, don’t worry. This article can guide you through your web-based bidding ventures. Here’s what you need to do before, during, and after the auction to win your target properties.
Before joining an online auction:
- Develop an investment strategy.
Never enter an online real estate auction blind. Determine your objectives for participating in the bidding. Consider the reasons behind your intentions as well. Are you looking for a townhouse, an apartment, or a condo to rent out and gain income? Or are you looking for one to be your primary residence? Establish your goals from the beginning to avoid making on-the-spot decisions, shotgun transactions, and more.
- Find out who’s participating.
If you’re joining an auction run by your real estate association, then it’s highly likely that the people/organizations who are putting up their properties for sale will be disclosed. Find out who they are and consider their real estate background. Are they long-time sellers? If so, what kind of properties do they usually put up for sale? If they’re not, how are they connected to real estate? Learn as much as you can about who’s participating to have a pretty solid idea of what to expect at the actual event.
- Establish your funding sources.
What’s the point of winning in an auction if you have no way of paying for what you won? Online real estate auctions seldom offer financing options. So, expect that you’ll be required to pay for the property in cash. In addition to this, you also need to present entity documents, proof of funds, and other documentation to secure the property. Check your credit status if you need to finance your purchase personally. Clear up any outstanding debts and loans to elevate your debt ratio.
- Know what you’re bidding on.
Review your target properties especially if they’re bank-owned, up for short sale, or foreclosed. It’s the best way to avoid any hitches later on. Make sure there are no hidden encumbrances or liens on the properties. Double-check their background and documentation. Be thorough. If the property is accessible to you, make it a point to visit it and examine its structure and coverage.
During the online auction:
- Stick to your budget.
Knowing how much you’re willing to bid on a property will help you avoid getting caught up in the competition and participating in a bidding war. Keep calm and know your limits. Strive not to get emotional if a property that you really want slips through your fingers. Keep an objective mindset. You don’t want to get caught up in the moment, outbid all other participants, and end up with a property that you can’t afford.
After participating in the online auction:
- If you won the property…
Be prepared. Just because you outbid all others doesn’t mean that the property is automatically yours. There are three possible outcomes to winning in an online real estate auction.
1 . If your bid exceeded the seller’s reserve, you can purchase the property.
2. If your bid is close to the reserve, there’s a chance that you won’t be able to purchase the property.
3. If your bid falls short of the seller’s reserve, you can’t purchase the property.
- If you didn’t win the property…
Don’t worry. All the deposits that you made in preparation for the auction will be returned to you within a week.
Whether you’re an investor hunting for promising properties for your clients or a homebuyer looking to purchase a primary or secondary residence, participating in online real estate auctions can help you narrow down your search. So, make sure you maximize them. Follow these tips to increase your chances of obtaining your desired properties despite the industry’s cutthroat competition.