| When you wish to buy a house, you might consider | | | | your investment. |
| going to real estate auctions. Most people nowadays | | | | 4. The atmosphere in a real estate auction can be |
| are using this to acquire a house. It might be helpful to | | | | quite intoxicating. It usually moves at a fast pace and |
| refrain from auctions until you familiarize yourself with | | | | loud. You might find yourself surrounded by |
| the process. Following are some disadvantages that | | | | auctioneers, real estate bidders and gawkers making |
| you should be aware of before you proceed. | | | | an almost circus setting in turning a bidder into a home |
| 1. Auctions require a high binder. Most auctions require | | | | buyer within minutes of the auction. |
| high and non-refundable binder, which usually amounts | | | | 5. All properties sold at auctions are offered 'as-is' |
| to at least ten percent. This could be a bit risky | | | | which means that if there are problems in the property, |
| especially when you are a novice in the real estate | | | | there is no recourse for you. There is a possibility that |
| business. Since it is non-refundable, you cannot allow | | | | you will be able to bid more than the worth of the |
| any room for error. If you mess up the financing or | | | | property since you have not had the time for a |
| overestimated your capacity to buy, you could lose the | | | | thorough inspection of it. You might also fail to see me |
| whole ten percent deposit, a considerable loss of | | | | you might be responsible for tax liens on your new |
| money. | | | | property. If you have not had the time to inspect the |
| 2. Because auctions are typically run over a short | | | | property, you might overbid on it, or fail to see |
| period, you will not be able to analyze the property and | | | | expensive problems underneath the surface. |
| its potentials in the market thoroughly. The list of | | | | 6. Be careful of properties in an auction that are in a |
| properties will be sent to you a week or two weeks | | | | location far from your locality. You might not have any |
| before the auction date, giving you a limited time to | | | | idea on the prevalent market rates in the location and |
| study it. This way, it is easier to make mistakes in your | | | | any troubles or issues over there. Make sure you have |
| choice. | | | | an idea of the sewage disposal, water supply and |
| 3. Be careful on paying additional liens. There are | | | | electricity concerns of the area. Seek the assistance |
| instances where a second mortgage holder forecloses | | | | of a title company that could provide valuable tips |
| without liens as the first mortgage that went into | | | | regarding concerns in land acquisition. |
| default. Usually, the auction starts at the balance of the | | | | If you will be able to conduct an extensive inspection |
| second mortgage. Now, if you buy the home, this may | | | | before you buy it and make sure that you know the |
| lead you to be automatically responsible to pay the | | | | process in property auctions, this could ease a lot of |
| liens of the first mortgage. Unless you do a quick title | | | | your uncertainty that normally comes in bidding on a |
| search on each real estate investment, you might be | | | | home than in buying in the traditional manner. |
| stuck with many unexpected debts, which could ruin | | | | |