I get calls all the time from Fredericksuburg home buyers who have seen a real estate auction advertisement and want to know how the whole process works. Most of the time these days, the property being auctioned is a foreclosure and is court ordered.
Reading the ad or note carefully will give you most of the information available about the property; but you can contact the auction firm to be sure and get all of the information about the auction. One thing to keep in mind is that the auction firm represents the seller. If you have your own real estate agent, they should be able to help you secure more information and may even attend the auction with you.
Real Estate auctions are public sales so all are welcome to attend. You may register as a potential buyer and still not actually bid. Because auction properties are sold in an “as is” state, you are permitted to have appraisals or inspections done beforehand at your own expense. In many cases, certified funds will need to be brought to the auction in order to bid. A certified check in the amount of the bid or a preset percentage made out to oneself can easily be signed over to the selling agent to prove you are a serious buyer or be deposited back into your account if you do not win the bid.
Being prepared for an auction is your best advantage. Having your real estate agent run a market analysis and give you the comps in the neighborhood will give you a good idea of what the property is worth. If you know your budget you can factor the buyer’s premium plus the estimated closing costs into the “high bid.” This is the also known as the auction’s final bid. It doesn’t usually pay to make a pre-auction offer as this would have to be pretty significant to get the selling agent to cancel the auction.
When you’re at the actual auction, here’s what happens: The lender is the mortgage holder for a repossessed house. The lender or bank is attempting to sell the property at auction to recapture the balance owed on the original loan. Often times, they end up taking less but will set an amount for the opening bid. The selling agent is often at the auction site on the phone with the bank during the auction and sets the opening bid. The auctioneer begins the sale and the bidding begins. Bids can be met or one may choose to pass. The winning bidder meets with the auctioneer immediately and delivers the certified check. Documents are often completed at that time and the property is purchased.
The best thing to do if you are interested in an auction property is to find out absolutely everything you can about the sale in advance. Your key to winning is being completely prepared. Real estate auctions in the Fredericksburg area are often advertised in the Free Lance-Star. For more information, contact Tom Smith, your Fredericksburg Real Estate Expert.
By: Tom Smith
Associate Broker, Century 21 Adventure Redwood