Today, nearly everything can be bought online, including homes. Whether you’re browsing at home or from the office, online property auctions have made it easy for investors and eager homeowners to find properties for themselves. However, with such a large sticker price, buying real estate at an online auction can be daunting, especially if you don’t know what to expect. At ServiceLink Auction, we make buying homes at auction easy. Use this guide below to learn more about online home auctions.
What Are Online Home Auctions?
Online home auctions are where bidders place bids on a property, such as a newly foreclosed or bank-owned home. They are similar to live auctions but occur over the internet on an auction website rather than at a courthouse or convention hall. When buying a house at an online auction, you can view photos of the property, property descriptions, and more to help you make an informed bid. Additionally, online property auctions can take place on various websites, including free online auction sites such as servicelinkauction.com, fee-based auction sites, and government sites.
Why Do Online Auctions Sell Real Estate?
Real estate can be sold at an online auction for a variety of reasons, whether it’s a foreclosure or a homeowner looking to sell fast. Below are some of the common reasons online auctions sell real estate:
Selling quickly: In some cases, homeowners may want to sell their homes as soon as possible without the added stress of listing their property and making necessary upgrades. By selling “as is,” homeowners can find eager investors and prospective home buyers who are willing to flip or upgrade a home.
Foreclosures: If a homeowner defaults on their mortgage payments, their lender can seize their home and use it as collateral to pay for the mortgage. When this happens, the bank or lending institution may sell the home at auction.
Failure to pay property taxes: As stated, you can find online home auctions through government agencies. If a homeowner fails to pay their property taxes, a government agency, such as the IRS or FHA, can seize the property and sell the home at auction to pay for the unpaid property taxes.
Criminal offenses: Government agencies can also seize properties if a homeowner makes any criminal offenses, such as failing to pay income taxes or using the home to partake in crime. In cases like these, agencies like the U.S. Department of Treasury will sell the home at auction.
What Are the Risks of Buying a Home Through an Online Auction?
While buying real estate at an online auction can bring great prices and return on investment ( ROI), there are a few risks to be aware of, so it’s important to know what to look out for to ensure you make a smart investment decision.
Competition: When bidding on online property auctions, competition can be high, since online auctions make it easy for people anywhere with an internet connection to join. With multiple types of buyers, you’ll be competing with more people, which can raise prices and make it easier to lose out on a property.
Paying in cash: Online home auctions may require you to pay for properties in cash upfront. Rather than working with a mortgage lender who can help with financing, you’ll need a large sum of capital in order to pay for a home at auction.
Buying As-Is: Buying real estate at an online auction means you’re purchasing the home as-is, which means you’ll be responsible for any maintenance or repairs. It also means you typically won’t have the opportunity to have a home inspection, meaning the risk of purchasing a home that needs significant repair is higher.
Evictions: Sometimes, the homeowners or previous tenants may still be living in the home you’re buying at auction. If the property is occupied you may be responsible for evicting the tenants living on the property once the sale has been finalized.
When you purchase a property via the ServiceLink Auction platform the experts at McCalla Raymer Leibert Pierce, LLC will facilitate the eviction process through vacancy. Click here to find out more about eviction services.
These are some of the top risks of buying a house at an online auction. Depending on your comfort level, participating in online property auctions may or may not be right for you.
How Does Purchasing a Home Through an Online Auction Work?
Now that you know what online home auctions are and their potential risk factors, how does buying a home on an online auction work? To help you get prepared, here are the typical steps of purchasing a home at an online auction:
Conduct research: The first step in buying a home at an online auction is doing your research. Review the property listings on the online auction to view square footage, the year built, the number of bedrooms, and other property information on potential homes you may want to bid on.
Register with an online auction: If you’ve found an online property auction you want to partake in, sign up and create an account.
Secure financing: Because online home auctions require you to pay in cash upfront, you’ll need to have your financing in place in the event you win the auction. This means having proof of funds, a significant money deposit, and any relevant documents.
Start bidding: With your financing in place, the next step is to start bidding. During this step, make sure to set your budget and have notes about the fair market value of the properties you’re interested in. Also, familiarizing yourself with how to bid can help ensure you make a wise investment.
Winning the bid: If you place a bid and win, a member of ServiceLink Auction will contact you regarding next steps.
Contact Us
Ready to partake in an online property auction? Contact ServiceLink Auction today to get started. Our online home auctions feature bank-owned, newly foreclosed, and foreclosure auction nationwide.