The Pros and Cons of Buying Real Estate at an Auction
Pros
Many of the foreclosed properties that are being sold are being sold at auctions
Starting bids can be as low as $1,000
Lenders don’t want to own these homes so they have partnered up with large auctioneers who have the network and marketing skills to attract investors and homebuyers
There is no long negotiating period with offers going back and forth
Huge selection of properties
Sellers are lenders or banks. These banks and lenders are not in the business of lending and not owning real estate and so they are very motivated to sell and NOW
Auctions are often perfect for individuals looking for that first or second home and bargain-seeking investors looking for income properties
It is easy to register, get pre-qualified and admission to the event.
Cons
There are no contingencies are outs for the buyer once he has successfully bid a property so your deposit has become non-refundable
There are a lot of bidders on each property so competition is fierce
Investors often over bid a properties value so you can overpay
Short escrows of 30 days
You need to do all your homework up front versus entering into an escrow with normal contingencies. That means any inspections you do and other expenses could be a waste of money if you’re not the successful bidder
In many cases auctions are standing room only
Many of the properties are junky, small houses and very little high end is featured
