Guide to Making the Most of Real Estate Auctions

Private Property South Africa
Neale Petersen

How to take advantage of auctions for investors

Auctions are normally associated with distressed sellers, deceased estates, and liquidation of assets but are an age-old proven method of selling property. In many cases they are becoming the first choice option for both sellers and serious buyers. Real estate auctions generally allow investors to purchase property inexpensively.

The first step is to know where the auctions are and how to sign up for them. Investors need to have the right tools and resources to make the best decision on these properties, especially with there are a number of properties available.

Tips for investor’s

Real property auctions provide investors with only basic property information on the properties for sale. Investors must always not take everything on face value and they must dig deeper to learn the affordability and any potential problems prior to investing in auction property. When considering investing, keep these things in mind before you attend the auction:

  1. Get finance in place or even a loan prequalification where possible prior to attending an auction to speed up the purchase process.

    1. Invest time in researching properties online independent of what is available from the actual auction company.

    2. Get a comprehensive valuation of the property and decide on a reserve price for sale and a ceiling on a purchase price for buyers.

  2. Understand the deal in terms of costs, deposits and the finance process.

What to buy at auctions?

A good mix of all categories from residential, industrial, retail, office and hospitality are all generally on show at auctions. Monitor auction houses, government gazette, and banks for local foreclosures for both residential and commercial auctions.

Many quick sell auctions information are available online are from the commercial banks and private lenders hoping to sell property quickly. These may not be advertised as heavily. Keeping tabs on foreclosures happening in the local area can help investors find potentially valuable properties operating in the auction arena.

Tips & Tactics

Use online auction real estate listings and services and other foreclosure services to find potential auction properties before other investors purchase them. Foreclosure listings are public information but are generally difficult to find.

Which class to invest?

There are few bargains left in the public auction arena for residential property right now however, its time will return again. There are bargains abound in all sectors and the secret is to identify it, do your due diligence and then be in apposition to invest. The industrial sector has many bargains particularly in the industrial sector plus

What the market will do in 6 months?

The global financial crisis has not made trading conditions in business easy and has also had adverse effects on property owners. Many commercial property owners have suffered cash flow problems and have not renewed their leases. Many highly-geared commercial and office retail owners have decided to offload their properties in the downturn. This has resulted in a lot of properties coming onto market.

The market is in a long slow recovery process and will not have a dramatic change over the next 6 months. Real recovery will only start to kick-in the last quarter of 2012. Investors who invest long-term who demonstrate patience will always reap long-term benefits in real estate no matter what category.

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