online real estate auctions

Bidding on Housing Auctions: Buy a House at an Auction


Have you ever thought about buying real estate at auction? This method of buying a house has many advantages for buyers, in particular the possibility of benefiting from a price which is sometimes much lower than those typically on the market. Follow this guide to learn how the different real estate auctions work and how to properly prepare to participate.

 

 

HOW TO BUY A FORECLOSED HOME BY BIDDING ON HOUSING AUCTIONS


Everyone knows about auctions. Who hasn’t had the opportunity to buy something on eBay before? You may have assumed – like many others – that auctions were reserved for personalities and collectors wishing to part with high-value items, or at best for individuals wishing to sell small personal belongings. It is little known, in fact, that real estate can also be exchanged through this means.


Auctions are often an opportunity to do excellent business, as the goods presented are intended to be sold quickly – these are, most of the time, houses or apartments seized by the courts, or that a owner must sell as soon as possible. But this is not always true: technically and legally speaking, any owner can voluntarily put their property up for auction. The prices are sometimes much lower than the market, which can be advantageous if you want to buy in a big city where the markets are very competitive.

 

Also, as a buyer, you cannot expect to have a positive experience at a real estate auction without being properly prepared, and without knowing the rules.

You should first know that there are typically three types of online real estate auctions: notarial or judicial foreclosure auctions, sheriff sales, and online real estate auctions, which partly operate on a model similar to traditional auctions but with private property.

 

Judicial Auction


The notarial or judicial auction is the classic form: a group of buyers raises the stakes from a starting price, and the auctioneer knocks down his hammer up to three times to adjudicate the sale. Real estate is sold there in the same way as other auctions, except that it is not shown to the public during the auction.

 

Judicial or notarial auctions?


The main difference between notarial and judicial sales relates to the origin of real estate. In the case of a judicial sale, the assets most often belong to unlucky debtors, and have been seized in order to repay a debt. Notarial sales, on the other hand, concern goods from public domains or estates without heirs. When an individual wishes to sell their property in this way, they must go through a notarial sale. The best deals are made in court sales, because the assets must be transferred quickly.


Auctions take place “by candle” or “against the clock”. When you participate in a “candle-lit” auction, the notary lights three fast-burning candles (a few tens of seconds); the auction stops when the last candle has been consumed, and the property is awarded to whoever made the best bid. If you attend a sale “against the clock”, each auction follows a time interval of 90 seconds at the end of which, if no one has outbid, the property is sold at the last bid pronounced.


All types of real estate can be acquired at an auction:


• Apartment
• House
• Entire building
• Professional premises
• Commercial buildings
• Bare land

The seller can be an individual or a legal entity. Sales take place in the chambers of notaries in the region in which the property is located in many cases. Other times, auctions online-only or at the local courthouse.

 

HOW TO PREPARE FOR THE AUCTION?


As with a typical real estate purchase, you should get all the information you need about the property. Sometimes, by virtue of transparency, the notary in charge of the sale may provides you with a complete set of specifications (or terms and conditions), which lists everything you need to know about the property (work carried out, easements, conditions of sale, starting price, mortgage status, etc.). However, this is not usually the case and the burden in on the buyer to do their research.

Purchase by Auction with a MORTGAGE


Important step: the financing of your acquisition. In a traditional sale, a condition precedent allows you to cancel the purchase in case you do not get your loan. But in the case of an auction, this condition does not exist: you must therefore ensure upstream, with your bank, that you can take out your mortgage, so as to arrive, on the day of the sale, with guaranteed funding.


Remember that auctions involve… overbids! This means that the starting price, well below the market, will not be the final sale price, and that this will depend on the offers made by the other candidates for the purchase. You must therefore calculate the maximum amount that you will be able to put before placing an auction, by including all the costs (for the notary, for the public authorities, for the organization of the auctions).

 

sold house - Bidding on Housing Auctions

 


To be able to participate in an auction, you must have a valid ID and the proper form of payment. Most auctions will require a letter from your bank showing availability of funds and you may also be asked to pay a refundable deposit(applied to the bid price) in order to participate.

 

Online Real Estate Auctions


Notarial and judicial auctions are not the only opportunities to buy property through this means. In recent years, online real estate auctions have become more common. Just as with courthouse auctions, it is vital to research the properties you are interested in buying.

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