- Property auctions most commonly consist of real estate that has been foreclosed on. Rather than take the property to a broker, many banks instead choose to auction it off to the public. It's also becoming more popular for individuals to put their own property on auction in order to sell it off faster without having to deal with a broker or the challenge of promoting the house themselves. Buying and selling property at auction is quick, but hidden costs can sneak up on unprepared participants.
- Most property auctions are publicly announced ahead of time, but the exact locations of the properties involved are rarely if ever disclosed. Photographs and general details about the property are provided, but potential buyers will not be able to actually go and visit the place until after the auction has concluded. The locations are detailed at the time of the auction. For buyers mostly interested in location, this is sufficient, but many foreclosed properties have significant damages and other issues that may put off some buyers.
- Before attending an auction, potential buyers need to provide bank account information to demonstrate that they have enough money to pay for the property. No payment is made on the day of the auction -- that happens after the sale has concluded. The primary advantage of buying bank-owned property at auction is price -- you can often get between 5 to 60 percent or more off of the market price when purchasing a foreclosed home at auction. Even ordinary owner-sold homes often sell for less at auction.
- Real estate investors can potentially make significant amounts of money at real estate auctions. In most of them, 20 or more properties are auctioned off every hour. As the condition of the houses is often in a variable state, many of them require significant repair -- and often even rebuilding -- in order to sell them on the market for a profit. The steep discounts on properties can provide excellent opportunities for investors experienced in low-cost home renovations or simply those who are investing in property for the long term.
- For most buyers property auctions are too risky to navigate. Even though the savings can be significant, those can evaporate quickly in home repair costs. In addition, the property may not be as attractive as it appeared from the photographs and description at auction, reducing the pleasure derived from the purchase. One excellent method to mitigate the risk of purchasing a property at auction is to research the neighborhoods involved thoroughly before making any bids. Learn enough about your area so that you can have a good sense of what the house is like as soon as you hear the address announced at auction.
