What steps does a real estate agent take
to purchase a property?
• GET PRE-APRROVED FOR A MORTGAGE
Typically, you will have two weeks to 30 days to close. The first thing you want to do is make sure your lending source will be willing to lend you the amount of money you will want to buy the property for at auction. You don’t want to wait until after you make the winning bid before you obtain approval for a mortgage loan.
• SET UP AN INSPECTION
Once you get a list of properties that will be up for auction soon, visit the ones that interest you and arrange for inspections of the ones you would consider buying. Hire someone to inspect thoroughly each property you’re interested in. Unless you’re rich, you will have to be selective because each inspection costs money. You can ask the auctioneer to allow an inspector onto the premises days or weeks before the auction, or you might have to wait until the day of the auction. Experts agree that you shouldn’t skip this step. It bears repeating that you buy a property at auction as is, defects and all, and it is up to you to detect problems before you bid.
• ASCERTAIN WITH THE AUCTIONEER THAT THE PROPERTY HAS FREE AND
An organized and thorough auction company will have a written, current title opinion showing the property is clear and a lot survey showing any encroachments prior to the sale for all to review. Before a lender will give you a mortgage, it will assess the property. Hidden defects can lower the assessment to the point that the lender will refuse to give you a mortgage.
• DECIDE ON YOU MAXIMUM BID
Zero in on the property you want and decide on your maximum bid. If you come to a real estate auction with a maximum figure in your head and you know not to spend any more than that figure, you can be safe. You just don’t want to be caught up in the excitement and overbid your limits.
If you’re looking for a home to live in, you could be at a distinct disadvantage at an auction because you’re bidding against experienced investors who might plan to fix up the house and sell it. Their experience gives them an edge, but you have an advantage, too. You’re looking for a house to live in, so you can probably bid higher than someone who is looking for a fast profit.
• MAKE WINNING BID AND MEET SELLER'S CONDITIONS
You have to pay a deposit (the same as earnest money). The deposit price varies with each auction house, usually ranging between 10-25%.You might have to pay a buyer’s fee to the auctioneer, typically 10%. This is similar to the commission paid to a real estate agent, except that the buyer, not the seller, pays this fee when a property is sold at some auctions.The seller will want to close the sale within 14 to 30 days.
Common Auction Terms You Need To Know!
A method of bidding in which a person who will not be attending the auction completes a form indicating the lots she wants to bid on and the amount she wants to bid. The bids are then executed during the auction by a staff member who bid competitively on behalf of the absentee bidder.
An auction at which lots are sold without reserve.
This phrase means that you are purchasing the item as it is. If it is scratched, broken, incomplete, or won’t work, that is the condition in which you buy it. If you discover damage after bidding but before you check out, you are still expected to pay for and remove the item. If you discover damage after paying for the item, no refunds are given for any reason. In other words, preview, preview, preview!
An offer of a price.
A bidding method most often used when there are several identical or similar lots being offered, for instance bookcases or, in the case of real estate, three adjacent parcels of land. When the Auctioneer announces that he will be selling a group of lots using bidder’s choice, it means that the high bidder will have the chance to take any or all of the lots in that group, each at the price of the high bid. For example, there are five lots of matching bookcases being offered bidder’s choice, and the high bidder bids $100. That bidder can take one for $100, all five for $500, or anything in between. If there are any lots remaining after the high bidder chooses, they are offered to the rest of the bidders until all are sold.
The entity with whom the Auctioneer has contracted to sell property; it is often synonymous with “seller” and “consignor.”
A detailed accounting of a seller’s items, including a list of the auctioned lots, the prices they were sold for and the commission taken by the Auctioneer. Absolute Auctions sends out consignor statements with payment 30 days after the auction.
A single object or a group of objects offered for sale as a unit.
A reserve is a minimum sale price set for a lot. For example, if a seller does not want his item to sell for less than $50, then $50 would be the reserve for that lot. With few exceptions, Absolute Auctions sells unreserved antique & estate merchandise.
auction where the seller has the right to accept or decline the high bid. At Absolute Auctions, this is most often used for vehicle and real estate auctions.
These are the governing rules for a specific auction. Each auction’s terms and conditions may vary and the bidder must understand them before participating in an auction. Participation in the auction indicates agreement to the terms and conditions.