Buyers know that buying a home at a real estate auction can give them a great opportunity to get a property at a super low price. While this is great to consider, what many buyers mostly overlook is the common risk factors that are attached to buying a home through a real estate auction. Hence, before you start bidding while standing against the experienced attendees of the auction, make sure that you fully understand the auction process.
Let us have a look at some of the overlooked risk factors so that you may consider them wisely in the next real estate auction you go to.
The cost of the property may exceed the market value
When you bid at an auction, you take the risk of paying the cost of the house which is much higher than the fair market value of that house. This is because you bid against many potential buyers and in that process, the price keeps on going higher. However, a desirable neighborhood or a personal interest in the location may be the reason for a buyer to bid higher than the fair market value of a house.
You cannot negotiate repairs
You must have heard the term ‘as-is’. When a house is sold ‘as-is’, it indicates that you cannot negotiate with the owner for the repairs. This will put you at the risk of buying a property that is substantially damaged from inside or requires excessive repairs.
Auctions need up-front cash
An auction is not a deal that will be closed once you pay a check or make a wire transfer. An auction requires the bidder to make an immediate payment after winning a bid. Hence, if you are standing to bid for a house you must keep the funds available in your pocket.
Winning a bid may not give you the ownership
The real estate auctions usually keep a minimum price that is acceptable or there may also be a hidden cost (reserve). In the case your bid is below the minimum price, even if you apparently win the bid, you might still not get the ownership of the property.
The property may be a hidden gem
There is no limit to the risks that are attached to a real estate auction, however, in some favorable scenarios; this risk may pay off amazingly. For this, you must make a bid only when you have well researched the market and have prepared for all the possible outcomes. This way you can easily buy a home at a relatively cheaper price. In addition, an auction deal will definitely let you get a handsome amount of money in terms of the resale value of the house.
If you want to know more about the real estate market in Columbia, SC then simply explore I Sell This Town or like the ISELLTHISTOWN Facebook Page for further information.