Because of the, for lack of a better term, dismal real estate market, we are seeing record numbers of real estate auctions advertised these days. With the dearth of sub-prime loans and adjustable rate mortgages resetting, it is likely that there will continue to be an increase in foreclosures. It is possible that this will translate into prime opportunities on the auction market as banks attempt to unload foreclosed properties at prices below market value.
While there are many good deals to be had at auction, be prepared before you attend an auction:
• Be sure to check the background of the auctioneer. This can be done through the state licensing agency. In addition to posessing a state license, They should be a member of the National Auctioneers Association (NAA) and the state auctioneer’s association.
• An auction can either be a reserve auction or an absolute auction. A reserve auction is whare a minimum bid must be met for the property to be sold at auction. Often, this amount is only known to the seller and the auctioneer. If a seller needs a certian amount of money to pay off a mortgage, it is likeley that they will have a reserve auction. The best deal is often at what is called an absolute auction. The seller has committed to selling the property to the highest bidder with no minimum price.
• A professional auctioneer should normally make a bidder’s package available to prospective buyers. This is essentially information about the property and the terms of the auction. This information should be available in advance is it is recommended that it be reviewed with an attorney.
• In order to participate in the auction, each prospective buyer will be asked to sign a document that contains the terms and conditions of the auction. Normally, a buyer is required to provide a certified check, advance deposit or lettersof credit from a bank prior to the auction in order to bid.
• Properties are normally auctioned ‘AS-IS” no with contingencies. Because of this, the auction is not contingent upon an inspection or qualification for a mortgage. This must be handled in advance. An agreement signed by a bidder before the auction can be binding even if a written purchase contract has not been signed and the buyer changes his or her mind afterward.