How to Buy Property Abroad at a Real Estate Auction

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how buy auction property
Source : Showmeinstitue

How to Buy Property Abroad at a Real Estate Auction - Are you considering attending a real estate auction abroad? Most people go the traditional route of purchasing a home after shopping for several months, using a realtor and negotiating with the seller. However, if you want to lose the headache and time associated with shopping for a home over the course of several months, especially if you are buying a home abroad, you might want to go with a real estate auction instead.

Real estate auctions are certainly not for everyone. However, if you are intrigued by the option of winning a bid on a fairly good property for an inexpensive price, read these tips and tricks on attending a real estate auction and nabbing the home of your dreams.

How to Buy Property Abroad at a Real Estate Auction

What is a Real Estate Auction?

A real estate auction is a public sale of properties like houses, townhomes, apartments and condos. While auctions were historically only open to real estate investors and professionals, properties can now be acquired via auction by nearly anyone. There are a number of reasons that houses are auctions off to the public. For example, many houses up for auction have been foreclosed by the government, or the bank repossessed the house and chose to sell it via auction in order to recover the original loan. It’s also possible that the original homeowner owed the government money and the government chose to reclaim and sell the house to make up for the money owed by the homeowner.

How Can I Find a Real Estate Auction?

Newspaper ads often promote real estate auctions, but it is also a good idea to search for these auctions online. If you’re looking into purchasing auction property, sites like PropertyGuru Malaysia are worth checking out. You can also check with a real estate agent or local auction houses to discover when and where the auctions are held. Auctions are generally held at a variety of different places, including local courthouses, conference centers or the auction company’s office, according to Auctions can even be conducted online.

Types of Property Auctions

Auctions typically fall into three different categories -- reserve auctions, absolute auctions and minimum-bid auctions.

Reserve Price Auctions

At a reserve auction, a lender can reject your offer even if you are the highest bidder at the auction. Also, the reserve price is not made known ahead of time.

Absolute Auctions

However, at an absolute auction, the highest bidder always wins.

Minimum-Bid Auctions

At a minimum-bid auction, the bidding begins at a specific price. The starting price for a property at auction is usually the balance remaining on the mortgage or even lower if the auction holder wants to get the bidders interested. Therefore, houses at minimum-bid auctions usually go for a much lower price than the home value. In a foreclosure auction, the lender generally does not profit from the auction and these homes are almost always sold for less than the market value.

Paying for a Home Bought at an Auction

If you are buying a property at auction, you need to pay for it right then and there. Anyone going to a auction to bid should come prepared with a cashier’s check for the specified amount of money the auction holder needs to complete the home purchase. Some auctions allow financing, but you should still come pre-qualified before you even start bidding. Once you have purchased the property bought at auction, be aware that you will still need to go through the closing process, similar to a traditional real estate purchase. There are generally also fees to even attend the auction, so keep that in mind.

Be Aware of Home Issues

You should be aware that most properties are sold at auction, because the homeowner had financial issues. These financial issues are often caused by a lack of money savvy, but sometimes, there are serious maintenance issues with the house that lead the homeowner to serious financial trouble.

You should therefore be cautious when purchasing a home at auction, because these serious maintenance problems may need to be address before you can even considering moving into your new home. Even if the house is technically move-in ready, there may be some outdated features with the home that you would prefer to update before moving in. Most auction holders don’t allow bidders to tour the property before the house is sold at auction, whether because the current tenant forbids it or because the tenant could choose to trash the house or apartment before moving out after the sale at auction.

It is therefore important that before you bid on any property at auction, you do your research and check to make sure there are no liens against the home. You can check with the auction company and even research the house’s title before bidding on the property. No matter what, make sure that you have enough money to pay for the property and its closing costs before placing any bids. You could face some serious fees if you decide to withdraw a winning bid at auction.

The Pros and Cons of Buying at Auction

While purchasing a home at auction can seem daunting, there are some benefits, according to Investopedia. For example, auctions offer an opportunity to buy properties that are new on the market. It also takes much less time to buy a house via auction than to buy through the more traditional process of shopping for several months. For those that are buying a home abroad, the time saved through purchasing property via auction is a huge plus.

how to buy property abroad auction
Source : Cenprop

Since there are many risks involved, fewer people are interested in purchasing homes at auction than through traditional buying methods, so you will have less competition and prices will generally be much lower. While auction properties don’t always offer a good deal, you are much more likely to get a good deal at auction than through negotiating with a seller. For many people, being able to buy your home at a much lower price counteracts the drawbacks of buying an auction property.

What are the drawbacks? Auction properties tend to have a lot of maintenance issues or they could have been trashed by the homeowner. There could also be liens against the home, whether that means tax liens, contractor liens or a second mortgage. You should avoid running into these issues by making sure that you work with your auction company to ensure that your new house has clear titles, free of any liens.

Another con of buying at auction is that you usually have to pay more in cash than you do when you’re buying a house via traditional means. While auction companies have different requirements for payment, you will usually need a cashier’s check for at least the minimum bid amount for the house you are interested in purchasing.

Even if you do win the auction, you won’t necessarily be allowed to purchase the property, since the bank does not have to accept the winning bid. Also, if you are not fully aware of your auction type, you could end up bidding on a property with a hidden reserve price that sets a limit on the minimum acceptable price.

So there you have it! While property auctions can offer many unique challenges to people seeking to purchase a home, it is one of the best and cheapest ways to buy a house abroad, provided you understand how the auction process works.

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May 21, 2016 9:59 PM delete

Menarik,artikel pertama dalam bahasa inggeris ke cikgu ? :)

May 21, 2016 10:15 PM delete

Ya artikel pertama..terima kasih sudi baca dan tinggalkan komen.. :-)


Terima kasih saya ucapkan kerana sudi meninggalkan komen. Komen anda semua amat saya hargai.