How do Online Real Estate Auctions work?
Leading Real Estate Online Auction Software showcase numerous advantages for buying properties on auction, while you can still have doubts on how the process work and most importantly is it really safe to place bids, find properties and make payments? Well, for everything in the process, here’s how we can get along and understand how exactly an online real estate auction works.
What is an Online Property Auction?
Exactly how the name spells, online property auction is the way to connect with the customers to let them buy properties by placing bids online. One can find a range of properties varying in their pricing, wherein the auction will either happen in real-time (live auction) or will take a designed/predefined time of a few days or a week. Moreover, you might have a misconception that all auction-listed properties are the NPAs, foreclosures, or short sales and some might also relate the properties to the distressed ones, but this might not be the case.
The Working Process
To be precise, if you wish to purchase a property online, you simply have to place a bid through the web and compete against other bidders. The further process is as follows-
Find an Online Auction Site
To start with you need to firstly find the right online auction site. Amongst the numerous websites offering online auctions which one can browse to check what sort of real estate properties they’re selling, how much they will cost, and the auction requirements as well. Once you get started with the search do not forget to check the details including property size, starting bod, how much deposit you got to require initially, registration requirements, what’s the procedure to take financial help and how will it be implemented (EMIs) in the later phases. Another imperative thing to keep in mind is well-researched real estate auction sites wherein you are easily stuffed with necessary information. You can turn on notifications once a new auctioned property is available or listed on the platform, this can help you to be the first one to know if any property reaches the online platform.
Get Yourself Registered
Ready to place bids on the properties? You need to get yourself registered before you make the first bid! The registration process requires the bidders to place an initial deposit amount which is most likely 5-10% of the property value quoted. This amount can be deposited through cash, cheque, or credit card. While in case you win the bid, the amount will be adjusted in the rest to the submitted principle sum and in case you couldn’t make it through the amount will be refunded through the source method of payment. Additionally, the website will ask you if you’re represented by a real estate agent, now this part is a bit crucial because even if this is an online auction, you still have to pay the commission. The amount of commission will depend, though in general terms it starts from 1% of the purchase price.
Provide Payment Details
Post-registration, the online real estate auction site asks you for payment details. This aspect might make the buyers have double thoughts as most of them might not be comfortable providing the credit card number but, online auction sites do require the details on a purpose. The reason being while you are looking for the right property to bid on, you basically look out for when the auction will initiate, when it will end, and what’s the current bid? The bidder might get all details on place the auction sites need reliability so that no one can back out as per their convenience. Though no money is deducted until you win the auction. Collectively, the main aim to perform this activity is to have a security amount deposited and safe so that even the bidder wants to step back later the auction site will keep their deposit and relist the house.
What next when you win the Auction?
In usual cases, if you haven’t won the auction, you will receive back your sum amount in a week, and in case you won the auction, you need to firstly sign the purchase contract and wire the deposit in tenure of 24 hours. Here the auction site representatives will help you through the process. In case you’re the highest bidder, either of the below mentioned things can happen to you-
- Absolute Auction- When the highest bidder wins the property, even if the amount is less than the actual value of the home. You are entitled to get an investment property if you’re the highest bidder irrespective of the bid amount.
- Reserve Auction- This kind of property auction allows the owners to set a reserve as the minimum amount they would like to accept for selling. In case you were the highest bidder but the pricing did not reach the reserve, the seller has the authority to reject your offer.
- Minimum Bid Auction- This one is quite similar to a reserve auction, expect one aspect where the seller sets the minimum amount for the bidding to initiate. By the end, the seller will only be accepting the published minimum price and therefore the highest bidder wins.
Buying a property has always been a tough and time taking task. While purchasing in the auction is a unique way to invest in real estate. An online auction software has therefore made the option quite easier and manageable by allowing investors by allowing them to find and buy auctioned homes online. Get started by listing your properties online to get more views and a better probability to sell the properties online.