Buying Real Estate at an Online Auction
Many buyers won’t prefer to bid for homes at an online auction. There is always a chance that during an auction, you may come across a home online. It could also be that you are currently looking for a home to buy and you stumble across one that is on auction. What do you do get it or how does the home auction work?
Buying a home from an online auction is very much different from bidding for houses in a courthouse. Your bidding is online and everything is electronic. A common opinion that people have is that houses that are on online auction are for foreclosure.
This is always the case, there are some homes that are for short sales while others may be sold by banks as bank owned homes. There are many places online that investors put up properties that were bought from the banks in bulk so they can make huge profits from the sale of each house.
These houses that are auctioned are very different from distress sales because the investors make some improvements in these homes before they sell them. They are usually referred to as flipped homes because they are remodeled to give an attractive appearance for buyers.
Opening Bids Price For Home Auctions
Just like the auction sales at a courthouse, the prices at online bids are meant to draw your attention. The price usually has no correlation to the actual market value. The seller usually places an estimate of 50% to 75% of what is expected. This means that the starting price for the auction will usually be lower than the seller's price.
Online auction websites normally post an estimated market value price and if you want to know the actual value of the item, you would have to go and find out the price from other markets. You can always check online for the prices of similar kind of homes that are listed in the property market. The opening price is not the actual price of the home because at any time, the seller may decide to give their asking price and it still doesn’t mean that the property will be sold at their prices.
The bidding commences with a bid price that is meant to go up throughout the auction. People can always follow up with the prices offered when the bidding is taking place. Sellers will always secretly hide their selling price. If the auction does not meet up with the reserve price, the seller may choose not to sell.
Finally, one thing you should know is that most online websites will usually sell their homes in their own condition. This means that whether the house is in good condition or not, you cannot renegotiate the terms of the purchase. You will still have to take the house with you even if there is something wrong with the house.
Most auction websites, including Fannie Mae's HomePath, sell their homes in As-Is condition, meaning you generally cannot renegotiate on price because you discovered a defect or found something terribly wrong with the house.
Now you know how online auctions work for homes, you should be able to start bidding your way to own a home.