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REO property auctions have traditionally been very popular and foreclosure property auctions have brought an even more heightened response to this type of sales process. The current trend has leaned in favor of buyers and there has been an increase in the number of REO properties sold over the past few year. Everyone is looking for a deal when it comes to buying a property, but is the auction strategy the best way to achieve these financial goals?
Auction.com REO property auctions can help prospective buyers to save money because many of these properties have been repossessed and are slashed to a fraction of the original costs to cover the remaining balance of the loan plus expenses. Auctioned properties are typically bought for over 25% less than by traditional means.
Auctioned properties also have the benefit of being a quick sale. Opposed to real estate agents who must mull over paperwork to prepare the sale, an auctioned property's sale will usually be complete within 24 hours. Early offers are also an option that allows a potential buyer to make a bid before the auction thus negating the auction if the bid is accepted.
Once the bidding is complete, so is the sale and no one can come swoop the property out from underneath your feet with a higher offered price. By law that would be illegal. Many home flippers have utilized Auction.com's REO property auctions to renovate a property then sell it on the open market with the intention of turning a profit. Cash buyers can usually buy a property at a reduced rate to maximize these profits.
There is an end to the rainbow though, with good must come bad. Some individuals that attend REO property auctions can get caught up in the excitement of being a part of an auction and inflate value to an unacceptable amount. These moments can be particularly disheartening especially when it involves the property that you have researched, studied, and invested in.
Sales commissions must be paid to the auction house just as a real estate agent would charge a fee. The commission is a minimal percentage paid on the final sales price of the property. The pre auction period does not give much time to do the necessary research on the property or to secure correct financing which transcribes to it being difficult to know whether the property is truly an investment worth undertaking. It is very possible with a property auction that any money saved on the actual property could need to be directed back into the property to fix any problems that may exist or arise from not having all of the correct information prior to purchase.
While an REO property auction can be a great way to save money, it can become complex and confusing without experience and an adequate education of the process so it is imperative to do all the research that is possible to ensure that your auction experience is ideal.