Buying and selling real estate attracts entrepreneurial-minded individuals like yourself.
Real estate is often the first investment people make, leading to potentially lucrative asset portfolios. Having drive is the first step, but you need to take the right steps (and make the right decisions) if you plan on making money from this venture.
One of the first challenges you'll face as a new real estate investor is financing. Before hitting up real estate auctions, you need to secure financing to pay for your new asset. It's a good idea to raise your credit score and pay down any debt to be eligible for more loans.
Auctions are a great way for new investors to buy properties at a decent price. They're also open to investors with varying credit histories. These properties are often foreclosed homes or homes from estates that have landed in governments' hands.
Here are a few ways to navigate the process.
Property Auction Tips
There are a few different types of real estate auctions out there. Check them out to find a model that fits your buying preferences.
For example, you have the absolute auction.
This is a traditional auction that rewards a property to the highest bidder regardless of the bid amount. Since there isn't a minimum bid range, these auctions attract a lot of attention from buyers. In this setting, the highest bid must be accepted.
If you join a minimum bid auction, you must prove you have the starting minimum bid on hand. The minimum bid is often the remaining mortgage balance or an overdue property tax amount.
The third setting is a reserve auction. After a buyer places a bid, the seller may accept or refuse the amount. However, the seller can't create a counteroffer.
Remember, all sales are final regardless of the type of auction you choose.
Real Estate Bidding Tips
Generally, there are two different kinds of real estate auction bids.
You have your opening bid. This phase lets buyers see what other buyers are willing to pay for the property. It also allows you to adjust your bids as other bids increase.
If there's less interest in the property, you'll likely score a discount; however, a popular auction can unleash a bidding war among buyers.
A blind bidding process doesn't allow buyers to see what their competition is bidding. This is one of the best auction strategies for sellers since buyers are more incentivized to place a higher upfront bid. In this setting, it's better to bid against yourself than underbid.
It's important to set a budget no matter the bidding structure or auction setting you choose. An auction environment can be quite exciting, thus, it's easy for new bidders to get swept up in bidding wars.
Enjoy the Benefits of Real Estate Auctions
There are many ways to approach real estate auctions and bidding strategies. Remember the above tips for beginners as you craft a smart budget and action plan for scaling your portfolio.
PMI Gold Coast Properties wants to help you enjoy those real estate auction benefits. Talk to one of our property management experts about using auctions to grow your portfolio.
We specialize in both real estate brokerage and property management to deliver a truly full-service experience to our clients.
