As of Late – I count 5 real estate auction websites that are prevalent for our current Santa Clarita home auction market.
Some are legit and some aren’t. The thing you need to know or grasp is the “auction” frenzy that exists.
Think about e-bay and those types of auction sites. What ends up happening is the “owner” of the item at auction gets more than a conventional sale would have brought.
Welcome to the Capitalist Market, I’m a believer in it and it does work.
However, when purchasing homes and real estate at auction, even within the online auction channels, you need to be careful and know what you are getting into.
Here are a few questions which need to be answered before having your real estate agent places an online bid for a home you are interested in. (below the radio show)
Online Auction Questions to ask!
- What is the ownership of the property being auctioned? Is it bank owned or is this an attempt by a “non bank” owner to bring more $$$ than a traditional real estate sale would?
- Will the property being auctioned come to the buyer with a clear title? Will past taxes transfer and become responsibility of the new owner? Will liens also be transferred to the new owner? What about any back HOA dues that the previous owner did not pay?
- How do the fees break down and who pays for what? Who pays the commission for the agent involved in the sale? Who pays for the fees that the auction websites incur or charge? Are these fee’s negotiable? Are you able to finance these fees? What about escrow and title insurance? Are Escrow and Title insurance part of the price you are paying for the property, or are they extra?
- Who currently is occupying the property? Is it a tenant in place with a legally executed lease agreement – which may stall your timeline and possession date? Can they be removed? Are they squatting? Is the seller still in control of the property “if bank owned”, and what will be their terms of vacating?
- What is the condition of the property, really? Did the previous owner pour quick set/concrete down the drains? Did they rip out the kitchen? Did they destroy the HVAC system and ductwork in order to retaliate against the bank who they believe is the bad guy?
- What if you decide to cancel the process? Maybe you had a change of heart between the time you placed your bid, or after your Realtor placed your bid and before the “bid results” were published. Will you get your “deposit” or monies spent to bid on the home back?
- Inspections and Disclosures – are they applicable? At the “real auction”, they are not applicable, from the seller’s side. For the buyer, they should be checking on all aspects of the home before bidding on the courthouse steps. However, with the online systems, that may not be the case – make sure you find out!
- Cash or Financing? Is financing allowed? Which lender do you have to use? Can you use your own lender? Is the sale “cash only”? How do they want the money delivered? Is there a minimum timeframe to provide a pre approval letter or verification of funds?
With online auctions, as with other online systems, they polish up nicely. They may be a turd that has some diligent elbow grease applied, but in the end, it’s still a turd.
Make sure you are getting the best advice.