5 Rules to Buy Foreclosure Properties through Online Auctions
Online auctions have become a popular shopping destination for everything from clothes to cars. You can even buy real estate through online auction sites! Those who deal in foreclosures have found that there are plenty of them to choose from on sites such as eBay.
But buying online comes with a great deal of risk. Here are five rules to live by when shopping for foreclosures via online auction.
1. Understand that you can’t be sure what condition the property is in without seeing it in person. Photos could be taken in such a way as to downplay negative aspects, or even altered to hide them. If you want to be sure that you’re not buying a property that is worthless, you’ll have to travel to wherever it is and inspect it or hire someone you trust to do it for you.
2. Check the reputation of the auctioneer. There are some auctioneers who are very professional and honest in their dealings. And then there are those who just want to make a quick buck by any means necessary. Do some research on the seller. You may be able to find information about high-profile firms by doing a Google search and checking with the Better Business Bureau. If you’re buying through a site like eBay, check the seller’s feedback rating and ask for verifiable testimonials.
3. Read the terms of the auction carefully. By bidding, you agree to those terms in the event that you win the auction. Make sure you understand everything perfectly and agree with it. If you have any questions or doubts, contact the seller to clarify.
4. Find out as much as possible about the property and come up with a maximum price you’re willing to pay based on that information (or the lack thereof). Whatever you do, stick with that price. Bidding wars could drive the price higher and higher, and in the heat of the moment it’s easy to get carried away and bid more than you intended. Resist the urge and remind yourself that there will be other auctions.
5. Keep in mind that you’ll have to pay up immediately. Once you’re declared the winning bidder, you’ll usually have no more than a few days to make a deposit. You may have to pay the entire balance in that length of time, or the seller might give you a week or two. If you’re really lucky, he might offer partial owner financing. But as a general rule, you should be prepared to pay right away.
There are great deals to be found at online foreclosure auctions. But there are also plenty of scams and shams. By following these simple rules, you can greatly reduce your chance of getting burned.