When looking for a house online, you are likely to come across a sign that says ‘This house is subject to an online auction’.
An online real estate auction is not as complicated as you may think. Online auctions are increasing in popularity and offer the chance to find a good deal.
An online property auction is a fast way to buy a home. The auction can either happen in real-time or live. Potential buyers then bid for the property, with the highest bid winning the home.
In this guide we will take a look at where to find online real estate auctions and how to register. We will provide you with all the details you need to successfully find a home at auction.
How does it work?
Now that we have explained what an online real estate auction is, let’s take a look at how it works. The procedure is not as complicated as you may think.
Find An Online Auction Site
To start, you must find a reputable online site that deals with online auctions. There are actually many sites out there and most of them are from real estate companies. Make sure you spend some time researching reputable online auctions. Auction.com, Hubzu, Corporeality, and Foreclosure, are all good places to start.
Register With the Site
In order to bid on the houses, you must be registered to participate at the auction. These websites will show you the details required in order to register. You will then be able to see additional details of the houses in order to participate in the auction.
Typically, you may be required to place a bid deposit of around 5-10%, which is proof of funds. Once that is done, the site will then ask whether you have a real estate agent. This is crucial for when they are paying commission.
Providing your Credit Card Information
After registration, the auction site will request your credit card number. While this makes some people feel a little wary, the reason behind it is because they will need some accountability on your part. Once you have inputted these details, you will be able to see when the auction starts, when it ends, and what the current bids are.
Bidding for the Home
The first thing you need to know about bidding for properties is that you will not necessarily have to pay the sale price advertised. Many sites usually post an estimated market value, but they then lower the prices in order to attract more investors.
The bidding price is therefore usually around 50-70% of the amount that the seller expects to receive. This is the starting point for online bids and it keeps going up as the buyers place their bids in the auction.
On the day of the auction, you will be required to log into your account and find the investment properties that you have already registered for. Verify your auction details and then place an initial bid. The initial bid starts the process.
Of course, you cannot start bidding on a home at $5 so there may be a minimum starting bid of $10,000 to avoid very low bids.
It may seem extremely strange to pay for a house that you haven’t seen in person but, if you want to, take a drive over to the house before you start bidding on the day.
Once you win the bid, be sure to use the right avenues when paying. This is something that has been done before, and it works. Happy bidding.