An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. There are several variations on the basic auction form, including time limits, minimum or maximum limits on bid prices, and special rules for determining the winning bidder(s) and sale price(s). Participants in an auction may or may not know the identities or actions of other participants. Depending on the auction, bidders may participate in person or remotely through a variety of means, including telephone and the internet. The seller usually pays a commission to the auctioneer or auction company based on a percentage of the final sale price.
Foreclosure auction
When auctioning a foreclosed property the noteholder may set the starting price as the remaining balance on the mortgage loan. In a weak market the foreclosing party may set the starting price at a lower amount if it believes the real estate securing the loan is worth less than the remaining principal of the loan.
In the case where the remaining mortgage balance is higher than the actual home value the foreclosing party is unlikely to attract auction bids at this price level. A house that went through a foreclosure auction and failed to attract any acceptable bids may remain the property of the owner of the mortgage. That inventory is called REO (real estate owned). In these situations the owner/servicer tries to sell it through standard real estate channels.
Buyer advantages
· Committed Sellers: Every seller is committed to selling their property and not just “fishing.”
· No Extended Negotiations: The open bid process eliminates the sometimes painful process of offer and counter offer negotiations. You bid, you win, and both parties sign a contract. Simple and done. This is especially good if you have a specific deadline.
· You Pay The Market Price: With the auction process, each buyer can clearly see what the other buyers are offering. The coming together of a motivated seller with multiple motivated buyers is the only way to establish a true market value for a property. The successful bidder pays only the true market value.
· Everyone Sees the Accepted Offer: When the auction is concluded, you see for yourself what the final price was since there are no concealed, third party representations.
Some Simple Advice
Buying a property at auction is simple, but make sure to perform your due diligence and have all your financial arrangements in place beforehand. Be certain you have answered all the questions you have about the property and have a value fixed in your mind that the property represents to you. In other words, know what you are will to pay for it, before you walk onto the bid floor.
It’s a simple process and is completely transparent. The highest bidder wins! Have fun with it!
When you are ready to Buy Property in Tennessee then you are ready for the Tennessee Real Estate Professionals Diane O and Friends. For more information about Diane O and Friends and our real estate services please fill out the online contact form or give us all call.
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Office: 615-371-1544
Diane Cell Phone: 615-406-2184
Mandy Cell Phone: 615-477-6959
Fax: 615-472-7931
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