Online property auctions have come to be very popular now. As with many other facets of life, real estate has gone high tech. anyone with a mobile phone, PC, laptop or any other connected device can search out and connect with properties in ways that we could never dream of just twenty years ago.
There are a number of real estate websites that are making tons of cash marketing properties online, while giving astute investors a high quality tool for buying properties. With a touch or tap, we can now check out all of the stats on a property, conduct a virtual tour & even check out the comparables in the area. This is truly a good time for investing in real estate.
The question now becomes “How does an upstart real estate investor get into the auction game And win?” And to be clear, we’re not just talking about submitting the highest price and winning out over the competition; we’re talking about strategically and surgically working out a plan to win auctions in a way that is most profitable for you.
Here are a few pointers to help you truly Win at an online auction:
- Have a specific strategy going into the auction & stick to it
Is your goal to buy and flip, or is it to buy an income property? Are you in the market for a number of lower-priced properties, or a smaller number of pricier homes? Are you able to manage a lot of possible repairs, or are you looking for something that is closer to turn-key? Do you prefer properties that in your immediate market, or are you OK with managing properties at more of a distance? Putting a clearly defined long-term strategy together will help you in the bidding process – so that you not only win bids, but win the Right bids.
- Due diligence is king
When it comes to the auction itself – buying a property can be done in your pajama’s while sipping your morning coffee, but the real work has to be done in advance. Know your market, know your comps. Check out the properties to be auctioned – so you know exactly what you’re getting into. Check the background info on the property. There is a world of information accessible to you – a lot of it on the internet – some you’ll have to do a little legwork for, but it’s all worth it. Most auctions, whether online or in person, are as/is sales, with zero contingencies, and zero recourse if the property doesn’t live up to what you Thought it was. Research the property as thoroughly as you can, and don’t forget to put eyes on the conditions of the surrounding area. Check the housing stats – including sales in the area, but also check out the crime stats, the residential demographics, etc. Remember, there is no such thing as too much information.
- Get your financing lined up ahead of time
Most of the online auctions are dealing with buyers who have cash in hand. They are not going to want to wait for you to line your ducks up after the deal is done. They are likely to demand cash within a set amount of time (and we’re not talking weeks or months), and they are even more likely to be looking for a cashier’s check on the day of the sale. A few of the auction services will give you a little time to line up your financing, but even these will only give you a short time to get the funds into the seller’s hands. When this option is available, a deposit is generally required for you to be able to participate in the auction. Some earnest money will probably be required as well. Lacking cash to seal the deal, you might win the bid, but lose the property and your deposit.
- Set your top price & don’t go over it
It’s easy to get caught up in auction fever. It can feel like a competitive game – especially online. The bidding can seem a lot like bidding on that nice watch on a site like Ebay, but you have to keep in mind that this is for much higher stakes. For each property that you plan to bid on – also have a plan of just how much you can spend and still make a profit in your long or short-term investment. Once you’ve set a price, don’t play with it just because another bidder is “just a few hundred dollars” over your bid. Once you break through that wall on your price limits, it becomes all to easy to keep doing it – just to win. The next thing you know – you’re in way over your head.
- Pay close attention to the bids — particularly as the auction draws to a close:
An auction is never over until it’s over. If the gavel – whether real or virtual – has not come down, it’s still anybody’s game. Some bidders, who are more experienced with online auctions, will slide in at the last minute and snipe (a term made popular on sites like Ebay). A few auction websites will extend the auction for a short time if they get bids at the last second. This will give you time to counter, but the point is that you must be there until the very end to win a property that you really want.