Buying a home in the traditional way with a realtor isn’t going to be a great match for someone selling a luxury home. Sometimes buyers want to experiment with alternative and non-traditional ways of discovering and purchasing properties, and some may consider luxury real estate auctions for that exact purpose. Auctions are a beneficial way to purchase a luxury home for higher budgets, but people still need to be prepared before they even step into the live or online auction house. Below we have an intro into what buyers and sellers need to know about luxury real estate auctions before they even make the first bid or sale.
Learn the Types of Auctions
Even before bidding, the buyer needs to know the type of auction that’s out there and the one they’re participating in. There are three different formats:
- Absolute auctions: At traditional auctions, the highest bid gets the property. Absolute auctions are notable for foreclosures.
- Minimum bid auctions: An auction where homes are only sold if bids meet a pre-approved minimum bid. This way, the seller walks away with something.
- Reserve auctions: The winning bid doesn’t necessarily mean a sale. The seller takes it as an offer and then decides whether or not they want to sell or keep the property.
Auctions change based on how buyers structure their strategy, so it’s good to understand the different terms ahead of time.
Real estate auctions for luxury property, and mansion auctions, are great, exciting ways to buy and sell homes. But they do come with a learning curve–especially for first timers. We encourage buyers and sellers to read up on the subject of auctions as much as they can before stepping into an auction house.
Choose a Maximum Budget
If a home buyer purchases their home with an agent, they’ll make a budget. The same logic goes for home buyers as well. They need to make a decision on how much money they’re willing to fork over on their dream property. With the number in mind ahead of time, buyers can be more prepared to stay within their means.
During auction time, it’s easy to get swept up in the urgency and excitement of winning the auction instead of keeping in line with your budget for the home. No buyer likes buyer’s remorse, so if a bidding war does break out, you’ll be equipped to handle the waves.
Find and Register for an Auction
With modern technology, real estate auctions can also be carried out online. Home buyers and sellers can both purchase and sell their homes at online auctions and actually bid on homes from anywhere in the world. It’s like bidding on websites but for luxury properties. If a bidder wants to attend an in-person auction, they can google them in their city, talk to an agent, or simply reach out to us at Platinum Luxury Auctions. We know where and when auctions are held and are happy to help.
Home buyers will need to register to be a part of an auction, whether this means signing up for an account on the auction house’s website or filling out forms at the location of the auction. People involved with auctions want to understand who is buying and then how to get in touch with them if and when a bid is placed and won. Accurate information is key here.
The Auction Process
The auction process is always evolving and presents new avenues for property transactions. One exciting method in recent years is what we are discussing here, the real estate auction. Whether you’re a buyer looking to invest or a seller needing to sell quickly, the process of auctioning off property necessitates a solid understanding of everything that’s involved. You deserve to understand what you’re getting into from a buyer’s standpoint and a seller’s standpoint.
Do Your Homework: Doing your homework is essential to a successful real estate auction experience. Study the properties featured for auction, their background and market values, as well as the surrounding neighborhood. With more knowledge, you’ll be more prepared to understand what you’re buying and bid in good faith.
Set a Budget: Set your budget ahead of time before the auction even starts. This way, you’ll avoid the trap of getting caught up in the thrill of the bidding war and spending beyond your ideal budget. Include potential renovation costs and additional expenses.
Inspect the Property:
Auction properties are sold as-is most of the time, so make sure you get an inspector on the site ahead of time. Hire a pro to assess the condition of the property, and identify and estimate issues and repairs so you’re not left blind-sided.
Understand the Terms:
Every auction has different terms and conditions for how they run the process. Read through your auction contracts word by word, hire a lawyer if necessary, and clarify any uncertainties with the auctioneer or your legal professional. Understand the details behind the deposit and the timeline of the transaction.
Tips for Sellers
Set a Realistic Reserve Price:
The reserve price is the minimum amount you will take for your property’s sale. Setting a realistic reserve price that makes sense with market conditions is vital to attracting the right buyers while keeping your interests protected.
Provide Comprehensive Information:
Being transparent is your best bet when it comes to auctioning off your property to potential buyers. Be detailed in your assessment of the property’s history, condition, background, issues, and gestures. Document all of this so that your buyers won’t bat an eye when they bid.
Real estate auctions are a great, unique, efficient way to purchase or sell your luxury property. When it comes to buying, buyers need to do their research, create a budget, and get familiar with auction terms. Sellers need to focus on choosing the right auction house, setting their reserve price that’s justified, promoting the property, and being transparent about the property in terms of details for bidders. With Platinum Luxury Auctions, we help buyers and sellers with all of the above and increase their chances of a successful win for both parties.