Lately, a lot is being said about real estate auctions. Buyers are finding this option attractive mostly because of pricing, especially in times of economic distress when everybody is looking for bargains. However, there are several risks associated with buying properties this way.
First, some auctioneers do not give the buyers access to the property for sale, which makes accessing the real price difficult. Auctions are also conducted at a different place from the actual site, making it hard for the buyer to inspect the property or even the area where it is located. Most times this is dangerous, since the exact fair price is impossible to determine without a proper inspection. There could be issues with the neighborhood (like crime or lack of services) or structural problems with the property itself.
Another disadvantage of auctions is the climbing price due to competitive bidding. This can result in a lot of wasted time if the buyer looks up every issue concerning a property but then is not able to buy it. Also, various legal problems with the titles and/or deeds can carry troubles in the future.
But by far the biggest hazard concerns the authenticity of the auction. Government and bank auctions are safe since all the legal issues have been addressed prior to the auction starting. In this sense, it is crucial to determine if the auction is being held by an authorized party who has after-sale services to assist the buyer with possible issues that may arise after acquiring the property. Some agencies, after collecting their fees, do not offer any kind of assistance when there are legal complications at the time of transferring the titles, when the sale is canceled or when the transaction encounters problems.
Thus, even though a buyer can get great deals when purchasing properties through auctions, it is imperative that he approaches the matter with caution and makes sure he avoids the common pitfalls these sales can carry.