The Greenville, South Carolina, real estate market is a tight one. On an average day, there are more people in the market to buy a home than there are homes available, and that makes it difficult for residents and investors to pick up properties. While some markets suffer through the supply and demand problem, buyers and sellers in Greenville have found an interesting solution. Greenville residents are using real estate auctions to buy and sell homes. There’s been a spike in auctions, providing people with the chance to pick up real estate that would otherwise pass them by.
Let’s look at how the system works and why people are turning to real estate auctions in Greenville. Then, you can decide if a real estate auction is a good option for you.
The Auction Process
Auctions are a little bit different than buying a home from a realtor. The buyer hires an auction company to run the auction, and the company sets the rules. A real estate auction runs much like an auction for personal property. People raise their hands to bid, and the highest bid wins. However, there is typically a reserve. If the reserve isn’t met, the highest bidder often gets to negotiate the price and can still come out as the winner. The auction company might also add a buyer’s premium to the purchase price. This premium is typically around 10 percent of the purchase price.
It’s important to go over the rules with the auction company prior to bidding on the property. That way, you will know exactly what to expect if you bid on the property. You don’t want to have any surprises when it comes to buying real estate, so this is very important.
Why Choose an Auction?
Real estate seems to be an ever-evolving process, but it can be hard to step outside of your comfort zone. However, there are some good reasons you should consider going to an auction if you want to buy or sell a property.
First, there is the simplicity. If you buy or sell through an agent, you can expect to wade through pages and pages of paperwork, most of which you probably won’t read. Properties bought and sold at auction don’t have contingencies, so the transactions don’t require mounds of paperwork. In fact, these transactions are so simple that the entire sale can be settled in a few days. That’s great news for both the buyer and the seller. Sellers can unload homes faster, and buyers can get into the new home or start renting it out in a matter of days. That’s so much easier than standard real estate transactions.
You also don’t have to worry about the property languishing on the market. There is a set auction date, and if the reserve is met, the property will be sold on that day. Some sellers even choose to forgo the reserve in order to ensure the sale.
Considering that many homes sit on the market for weeks and months, and sellers don’t know when they’ll finally move, this is reassuring. It gives buyers and sellers some confidence going into the transaction. No one has to play games. The home is going to be sold that day.
You also have the appreciate the transparency of the process. Think about how the normal buying process works. You put in a bid and then you have to wait to see if it gets selected. You don’t want your bid to be revealed, nor do you want to overbid on the property. It’s a guessing game, and it’s stressful. Bid too low, and you’ll fail to get the property. Bid too much, and you’ll overpay. That’s the danger of a private bidding system. You don’t know where you stand, so overpaying or underbidding are serious concerns.
Auctions don’t have any secrecy. You know how much people bid, and you can choose to bid more or throw in the towel. This type of transparency is something that buyers welcome. You know where you stand at every point of the process.
Auctions also give buyers a chance to get a foothold in the competitive housing market. Greenville’s market is so competitive that it’s not unusual for a home to already have an offer by the time a buyer’s agent gets in contact with the real estate agent. That means buyers miss out on homes they would love to purchase. They don’t have to worry about it when they bid in an auction.
There are also a couple of things that mainly benefit sellers. First, they can sell the home as is. They don’t have to worry about fixing it up to make it attractive for the market. There aren’t any contingencies, so the buyer has to take the property with problems and all if he or she has the winning bid. If you want to get rid of a property fast, this is the way to go.
Keep in mind that many of the properties up for auction are in amazing condition. Auctions have a reputation for only offering run-down foreclosures, but that isn’t really the case. You can find your dream home at an auction, even if you buy it “as is.” “As is” doesn’t mean it has a leaking roof or a bad hot water heater. It can be in perfect condition. You just need to do your due diligence.
Also, sellers often get more than the home is worth during the auction process. There’s something about bidding that can make people lose their minds. They bid more and more money in an effort to win, and they end up paying more in the process. It happens on eBay all the time, and it can also happen on real estate auctions. That doesn’t mean you can’t get a deal as a buyer. You can, but you have to be careful. Don’t get carried away, or you might end up paying thousands of dollars more than the home is worth.
Auctions are growing in popularity in Greenville, but that doesn’t mean they’re without risks. First, of course, there is the risk of the price. This is something that cuts both ways. Often, the homes end up going for more than they are worth, and that hurts the buyers. On the flip side, it’s not unusual for the seller to get far less than anticipated. Sellers have the option of adding a reserve, but that means they might not sell the home at all. Bidders might not be willing to bid up to the reserve, so the home will stay on the market.
In some cases, sellers start the bidding at one amount and end up making far less because no one will bite. For instance, they might start the bidding at $200,000, but end up selling the home for $150,000. Instead of making more than the starting bid, they make far less.
Of course, if you’re doing a live auction, that’s the chance you take. Nothing is guaranteed during the auction process, so you might get more or less (or pay more or less) than expected. That’s the nature of auctions.
Speaking of spending more, it’s easy for buyers to get carried away. It’s a good idea to decide how much you are willing to spend before the bidding starts. If the bids go above that amount, stop bidding. Otherwise, you will end up spending more than you can afford, and that will put you in a terrible situation. You will regret buying the property, and you might even want to unload it as soon as you can. Of course, if you spent more than the home is worth, you will likely lose money if you sell it.
There are also some things to consider if you’re interested in buying a property at an auction. Keep these things in mind before moving forward with the auction process.
First, appraisals aren’t required for properties at auctions, but you should still get one. While it’s not necessary to conduct a full appraisal, you should have an appraiser perform a desktop appraisal at a minimum. The appraiser will research the property without leaving the office. He or she will look at tax records and other information to determine the value of the property. This will give you a good idea of how much you should spend. That way, you won’t get in over your head if you buy a piece of property at an auction.
Sometimes, the auctioneer will require you to disclose your maximum bid. Then, he or she won’t let you bid over that amount. Don’t expect that to happen when you try to buy properties at auction, though. In most cases, they want you to spend as much money as possible, so it’s up to you to protect your bank account. Still, it’s necessary to go in knowing your maximum bid amount in case the auctioneer requires that you disclose it.
You also have to pay for the property immediately after the seller accepts the bid. You’ll have to write a check for the property, so if you’re getting the property financed through a bank or mortgage company, you’ll need to take care of that ahead of time. You’ll need to have a good idea of how much you’re going to spend so you can finance it before the auction begins.
In addition, you should consider how fast-moving an auction is. You have to take care of business before you go to the auction. You won’t have the chance to get the property appraised once you’re on-site. There really isn’t time for negotiation or paperwork, so have everything in order beforehand. Otherwise, you will miss your chance.
Renting the Property After the Auction
Auctions are an excellent way for landlords to acquire property in Greenville. Securing a piece of property is just the first step for landlords, though. If you’re going to be a successful landlord, you need to follow a few steps.
First, you need to create a rental listing. Post your listing to all the major rental sites, including Rent.com and Craigslist. This will allow you to reach as many people as possible. That’s the best way to find a tenant for your rental property.
Add a rental application to your listings so people can apply for the rental online. This will save you a lot of time, and it will make it easier for you to keep your applications organized. Instead of having a filing cabinet full of applications, everything will be stored online. That’s so much easier. Plus, you’re less likely to lose something.
You’ll need to screen your applicants by running tenant background checks and credit reports. Once you find a tenant that passes the tenant screening process, create a lease agreement and give the person the keys to the home.
Your work doesn’t end there, though. You need to work hard to keep the tenant/landlord relationship running smoothly. Online rent collection is a great way to accomplish that. Your tenant will like being able to pay online instead of mailing a check or tracking you down each month, and you’ll appreciate the way the money goes right into your account. This will improve your cash flow while reducing your risk, and you can set it up right on your website. It doesn’t get easier than that.
You can also use other tools, such as a shared maintenance calendar, to ensure you have a good relationship with your tenant. Communication is key, and by sharing online tools, it will be easy for you to communicate.
Get Ready for the Auction
If you’re ready to add some property to your portfolio, you should check out an auction. While some properties go for more at auction, others come with huge savings. Set your budget, and then go out to take a look. You just might find the perfect property. Then, you can find a tenant and make a steady income through your rental property.
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