Online Auction Real Estate Bidding 101: A Beginner’s Guide to Success

The world of real estate is constantly evolving, and one of the most recent developments in buying and selling property is the rise of online auctions. With online auctions, buyers can bid on properties from the comfort of their own homes, without the need to attend a live auction in person. However, as with any new process, there are some things you need to consider when buying real property on an online auction.

Secure Financing

Before you participate in an auction, it is important to have a clear understanding of how you will finance the purchase. This can involve securing a mortgage or other type of financing, and it is important to have this in place before you bid on a property. It is also important to keep in mind that the auction may have specific financing requirements, such as a certain down payment or a specific type of financing, so it is important to understand these requirements before you participate.

Understand the terms and conditions

Another important consideration when buying real estate through an online auction is understanding the terms and conditions of the auction. Every auction is different, and it is important to read and understand the terms and conditions before you participate. This can include information about bidding increments, deposit requirements, closing dates and other important details. It is important to ensure that you are comfortable with the terms and conditions before you bid on a property. This is not one of those scenarios that you just scroll to the bottom and hit accept. Make sure that you fully understand the terms and conditions and if you don’t, don’t bid or ask the auction manager prior to bidding so that you are fully informed.

Due Diligence

Before bidding on a property, it's important to conduct due diligence to assess its value and potential risks. This includes researching the property's location, condition, and any liens or outstanding taxes. You may also want to have a professional inspection done to identify any potential issues with the property. Keep in mind that online auctions typically sell properties “as-is, where-is“ so it's crucial to do your homework before making an offer.

Registering for the Auction

To participate in an online auction, you'll need to register on the auction platform. This process typically involves providing your personal information and verifying your identity. You may also need to provide proof of funds or financing pre-approval. Make sure to register early and complete all of the necessary steps to avoid any delays in participating in the auction. You may also need to be approved by the auction manager. This is for your protection that you fully understand the terms and conditions of the auction and also further verifies that you are a willing and able buyer.

Placing Your Bid

When the auction starts, you'll need to place your bid. Most online auctions operate on a timed bidding system, meaning that bids are accepted for a set period of time, typically several days. You can place your bid at any time during the bidding period, but you should monitor the auction closely to avoid missing out on an opportunity. Timed Auctions will generally close on a “cascade” system which means that there will be a pre-determined amount of time that a new bid can come in before the items is deemed sold. For example, there may be a two minute cascade close. If no one bids within the two minutes, the property closes. However, if someone bids, the two minutes will start over until not other bids are placed.

Live online auctions are different than a timed auction. There will be pre-bidding for a few weeks leading up to the actual auction date. At the scheduled auction date and time, a live stream will take over and an auctioneer will conduct the auction virtually. There will be live bid calling and bids being offered and accepted live. This is just like an in-person auction but it is just conducted virtually. The anticipation and excitement of bidding is still there but just in the comfort and convenience of your home or office.

Winning the Auction

If your bid is the highest when the auction closes, you'll be the winner of the auction. At this point, you'll need to need to sign a contract for the sale of the property.  An auction manager will contact you promptly following the auction to make arrangements for signing the contract and collection of down payment. Another convenience of utilizing technology is that you can sign a contract electronically. The auctioneer can have this to you in a matter of minutes and you will be on your way to purchasing the property.

Each auction may be conducted a little differently so it is important that you fully review the terms and conditions of the auction you are interested in prior to bidding. Also, never hesitate to reach out to the auctioneer and ask questions. The process of buying online is continually getting easier and adapted by many buyers. Buyers and sellers enjoy the convenience of the online platform and the discrete nature of the online service. If you have any questions about how online auctions work, where to start or how to sell your property online, feel free to contact us and we will be happy to get you started. jared@auctionplus.net

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