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Charlottesville is the second-most expensive housing market in Virginia. You can find more affordable properties at real estate auctions. However, you aren't guaranteed to get a good deal.
You need the right real estate bidding strategies. Learn more about real estate auctions and how to make the best auction property investment.
Understand the Types of Properties for Sale
One of the most important bidding tips for real estate auctions is to understand the types of properties that are for sale. You're most likely to find auction listings for:
- Foreclosures
- Property tax defaults
- Bank-owned properties
These types of properties can be good investment opportunities if you know what you're getting.
Foreclosures
Foreclosed properties have been seized by the lender after the borrower failed to make payments.
Foreclosed properties have often been neglected. They usually need repairs and updates. These potential expenses should be factored into your bid at the auction.
Property Tax Defaults
If a property owner doesn't pay their property taxes, the tax authorities place a lien on the property. The city or county can seize the property if the tax debt isn't settled. They'll sell the property at an auction.
Bank-Owned Properties
If a foreclosed property doesn't sell at an auction, the bank takes possession of it. The bank typically cleans up the property and may complete some minor repairs. They want the property to sell when it goes to auction again.
Prepare for Real Estate Auctions
Before making an auction property investment, you need to be educated about the real estate you plan to bid on. You should be financially prepared to move quickly.
Learn About the Market and the Property
The auction listing should give you some information about the property for sale. This will let you find similar properties that are on the market or recently sold. You can avoid overbidding.
If the opportunity to visit or inspect the property is available, you can get a more accurate valuation. You can avoid problems like liens and unexpected co-owners by doing a full title search. You should also check the zoning restrictions to verify how you'll be able to use the property.
Determine Your Budget
You can purchase some properties at real estate auctions using a mortgage. Many others require cash.
You'll need a strong preapproval letter to purchase with a mortgage. You'll also need a down payment and cash for a deposit before you bid.
Your bid should factor in the cost of fixing up the property. In addition, many auction companies require you to pay a buyer's premium of 5-10% of the purchase price.
Register for an Auction
You need to register for an auction before you can bid. Some auctions are in-person, but many are now online. Be sure to follow the auction company's rules for bidding.
Find an Experienced Real Estate Agent
Real estate auctions can be a good place to buy property below market value. However, the property may need renovation and repairs. A real estate agent with expertise in the local market will help you make a competitive bid.
You can rely on PMI Commonwealth for real estate guidance in Charlottesville, VA. We're a full-service real estate asset management company. We can help you navigate the auction process.
Schedule a consultation with PMI Commonwealth today to start finding your winning auction strategies.
