When going about buying at an online auction, there are some very bits of advice you should follow. Some of these are obvious, some not so obvious, but all very important to making sure you make the right decision without tons of headaches and frustrations.
One of the best pieces of advice is, make sure you have the financing. Many loan lenders try to protect themselves from default through required a loan-to-value ratio of 80% or less. This means that the home must be valued at least 20% more than the loan sought to buy the home. Therefore, it’s prudent to ensure that you not only have the funds to cover the principal and interest of the loan, but also the remainder of the home value. In most circumstances you will have to close on the purchase within 30 days after the contract is signed. At this time, the remaining amount (usually 90%) is due; covering what was unpaid after the required down payment. Moreover, for foreclosure purchases at auctions, often there is no mortgage contingency clause allowing the purchaser to be reimbursed for the down payment should he/she not find financing from a lender. This underscores the importance of ensuring you are financially solvent and able to pay for the property before purchasing it to minimize the risk.
Potential buyers and sellers should also be well-versed in real estate codes and laws in the state of the properties in interests. This is especially important when buying foreclosure properties through online auction, because foreclosures are conducted on a state level. Below are two valuable sources for these codes in both Wisconsin and Illinois.
Finally, real estate professionals advise that potential buyers consider properties within their particular locality of residence, maintaining that the importance of local knowledge cannot be overstated. As real estate professional Ralph Roberts notes, when looking at properties in your own locality, you are able to visit the home and “You can maybe even find a tenant whom you know to occupy the home.” Moreover, this strategy can protect you from fraud, as “The farther it is away from you, the higher the chances you could be a victim of fraud.”
Ensure you have the financing beforehand, know the state real estate laws, and think local. These tidbits should help you in your search and allow you to make the best informed decision, and Beloit Auction & Realty is here to help you along the way.
See you at the auction!