Monday, March 09, 2009

Real Estate Auctions

Here is an article in the Orlando Sentinel about auctions. Some things to know about auctions is that your only opportunity to inspect the property will be before the auction, as properties are alway sold "As Is" condition. The buyers pays for any inspections costs.

Other fees not addressed in this article is most auction companies add a buyers premium of 5-10% of purchase price at closing that is an adminstrative fee going to the auction company. Also you may have to pay the sellers past HOA dues.

In addition, if you are financing the property, you may be required to use the auction companies lender or forfeit the financing contingency, this does not allow you to shop around for the best rates.

You will be required to bring money to the auction, and once under contract an additional deposit maybe due.

Auctions are not for people looking for move-in ready properties, but willing to do repairs. They are not for people who are low on cash reserves due the amount of cash needed to go to contract, and increased closing costs with the additional buyer premium being added. In addition, you have to be willing to put an effort in this process and be willing to accept you may not get the home at the price you wanted or at all.

If you are thinking about purchasing an auction property, do your homework and hire a real estate agent to help represent you through the process. Realtors do get paid by auction companies, but a reduced rate.