Selling your home should be an exciting time, but in some cases, might not be the experience you had hoped for. From the moment the property hits the open market, the clock starts ticking as to how many days before it is sold.
Selling your home should be an exciting time, but in some cases, might not be the experience you had hoped for. From the moment the property hits the open market, the clock starts ticking as to how many days before it is sold. However, auction sales are a growing trend to move the properties swiftly, albeit there are pros and cons attached. Selling a home on the auction block has been a successful strategy for homeowners who need to have a quick sale and are somewhat flexible with the final sale price. And although selling at auction can move a property in three to four weeks, not every home owner will be content with selling at a discount.
If the auction option sounds like a viable resource for you, there are a few simple steps to better prepare yourself for this novel venture, and help to ensure that you have made the right decision.
Tips For Sellers:
1. Profit Margins.
The first question to answer is how much money is the minimum you may accept for the property to pay off the mortgage. In some cases, the auction price may fall short, leaving the seller with a deficit to be paid to the lender. However, in the case of older homes or those with plenty of equity, the auction selling price is much more flexible.
2. Calculate The Fees.
An auction house will generally take a percentage of the total sale price of the property. Fees may range from six percent and upwards, so be sure to get the fee in writing and crunch the numbers in a variety of possible outcomes.
3. Choosing The Auction House.
Most major metropolis areas have quality auction blocks that specialize in property. You will want to do your research and get the best company that spends money on its advertising and is well known in the community for fast sales.
4. Absolute Auctions.
There are two roads to travel when you wish to sell your property on the auction block. The absolute auction is a process where the property will be sold to the highest bidder. This type of auction is a sure fire way to move the property with speed. However, the downside is that the seller must take what was offered on the home, a maneuver that can be risky to sellers who need a specified amount to satisfy the mortgage.
5. Minimum Bid Auctions.
This type of property auction has a reserve price, or minimum bid that will be accepted by the seller. And although the price is fixed to where it cannot fall below the minimum, a good auction house may be able to raise the selling price for you. This type of auction works well for properties with little equity and gives the seller greater control of the outcome.
Tips For Buyers:
6. Get Your Lending Docs In Order.
Buying a home at an auction is a great way to say thousands, and you want to be ready to go as soon as possible. So be sure to get all your lending documentation in order before you attend the auction.
There is a little leg work involved when buying a home at auction. Some auction houses hold a preview of the property, which every savvy buyer will take advantage of. However, in some cases, it is not possible to enter the property for a look around. In such cases, be sure you do a drive-by and perform the property observations from the street.
8. Priority List.
Yes, auctions are fun, but you must be sure that you do not get caught up in the excitement and lose your train of thought. The best way to stay focused is to make a list of all the properties that you are interested in and rank them in order of their importance. List the features that attract you and set yourself a firm budget for each home. Property description lists make the auction process neat and clean with no mistakes.
9. You”re The Winner.
When the auction process becomes fast and furious, its easy to get carried away and make a bid that you did not intend to commit to. In most cases, its a bid over budget, so be mindful that your bid is legally binding. If you are declared the winner, it cannot be retracted, even if you have made a mistake. So be sure to stay focused and let nothing sway you from your game plan.
10. Mortgage Paperwork.
Once you have won the bid for the property, be sure to contact your lender immediately and get the lending papers in order. You are legally responsible for the winning bid and must move quickly to satisfy the financial matters.