Most buyers do not intentionally try to bid on a home through an online auction. However, you can search for homes online and find the perfect listing with small print saying the sale is up for auction. What does it mean?
Where are Online Auction Houses
The online auction system is different from bidding for a home in person through a trustee’s sale or a sheriff’s sale. For starters, bidding is carried out via the web. All electronic. Also, contrary to popular opinion, every home for sale through an online auction is a forced foreclosure . Short sale of some houses .
Others are bank-owned house by bank . You can find websites where investors buy it as a bundled package home, often known as a bulk buy, after purchasing it from certain banks. Investors now want to get the highest and best deals for every home.
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Most homes are distressed sales, but not every home up for auction fits into this category. Investor-owned homes may be fixed and ready for sale. returned home . To avail the benefits of buying Real Estate at online Auction choose Property Conveyancing Brisbane. For more information contact Property Conveyancing Melbourne.
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Opening Bid Price for an Auction House and Reserve Price
Like a barker at a country circus, the online bid price is to get your attention. It’s not necessarily the selling price you’ll pay, and it may have little to do with real Market value . The estimated bid price can be between 50% and 75% of the amount the seller hopes to receive. It is a starting point for the auction and is usually lower than the seller will accept.
Many auction sites will post the estimated market value. To determine true value, comparable sales . These are the selling prices of similar homes sold recently. These are not the selling prices of the houses for sale – they do not indicate that the house will sell at the price, as sellers can ask any price they want. Only the final sale price of a closed sale in the past few months is a comparable sale.
Bidding usually starts at the bid price and moves up.
Most sellers have a hidden reserve price.
For example, a seller might submit a $400,000 home listing with an attractive opening offer of $200,000. Buyer A can bid $200,000. Buyer B can bid $225,000. Buyer A can then raise their initial bid to $235,000.
If the seller’s undisclosed reserve price is $375,000, this home will not be sold to any of these bidders, and the auction will not be concluded – which is an auction for some people.
Bidding for a Home in an Online Auction
Once an offer is accepted, serious deposits may be at risk if you later decide to cancel . Buyers who lose deposits tend to do so because of a misunderstanding of the rules or because the deal doesn’t expire.
Most auction websites, including Fannie Mae’s HomePath, are As-Business Case, so if you discover a defect or find something terribly wrong with the home, you usually can’t renegotiate the price.
Your first step is to create an account on the website which includes providing your credit card number for the highest deposit. Determine if you can get financing, as most auction sites allow financing, and talk to a lender before making an offer to make sure you can qualify for a loan.
You can watch the bidding take place on some auction websites. The first bid will start processing. Subsequent bids may have minimum requirements known as incremental bids.
If the raise is set at $10,000 and the first bid is $100,000, this means that the second and subsequent bids must be raised by at least $10,000. Therefore, a second bid of $100,001 will not be accepted. In this scenario, a second bid must be at least $110,000 and a third bid set at $120,000.
Short Sale Auctions
If the auction house is a short sale, the seller may have already accepted a bid and is now awaiting bank approval. Instead, the bank may choose to put the house up for auction to get a higher bid.
This type of auction is allowed by the bank because the bank is entitled to the highest possible price, and in a short sale, the bank sets the rules, even if the bank does not own the house.
Therefore, the buyer who signed the original contract of sale can sometimes win the house without bidding. Multiple Listing Service ( MLS) from your agent If a buyer is already contracted.