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Tips for auction buyers
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1. Download a free tip sheet
before you preview properties.
The property descriptions provided
by auction companies are often at odds with public
records. For example, the auction brochure may
say a house has four bedrooms, but the tax
assessor's records say it has three. Or a property
may be described as being on a tenth of an acre,
while public records indicate it's on half an acre.
If it turns out the auction
company made a
mistake on a property you've bought, don't count on
getting your deposit back. When you register
for an auction, you usually have to sign a statement
agreeing not to rely upon any information provided
by the company.
To help you, we provide free tip
sheets that show the public records for some
auctions. Unfortunately, even public records
can sometimes be wrong, so be sure to visit any
properties you want to buy.
To download a tip sheet, go the
the Upcoming Auctions box to the right and click on
the link.
2. Decide on your
maximum bid before you go to the auction.
Auctions are frenzied and
loud, and terrible places to make big
decisions. Before you go to an
auction, decide how much you're willing to
pay for a property and don't bid more than
that.
3.
At the auction, pay attention to rival
bidders
The REDC terms and conditions
state, "Except where prohibited by law, the
Auctioneer may open bidding on any Property by
placing a bid on behalf of the Seller and may
further bid on behalf of the Seller, up to the
amount of the Reserve Price, by placing successive
or consecutive bids for a Property, or by placing
bids in response to other bidders."
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How can you
tell if you're bidding against a serious
bidder? Watch the bid assistants, who
are usually dressed in tuxedos. If
they're not rushing to help a rival bidder,
that bidder may just be pumping up the price. |
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4.
Ask the auctioneer to raise the bid by a smaller
increment. Suppose you're competing with another
bidder for a property, and he bids $240,000. The
auctioneer then asks if anyone's willing to bid
$250,000.
If your rival
hesitated before bidding $240,000, you might want to ask to raise by a smaller increment, say
by $5,000 to $245,000.
There's a chance your rival will
refuse to go up to $250,000 and you'll win the
auction for $245,000.
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If your rival seems reluctant to
go any higher, ask to raise by a smaller increment. |
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5. Do your homework.
- Call a few
insurance companies to find out if the home is
insurable at reasonable prices.
- The
Megan's Law
website will let you know if any registered sex
offenders live nearby.
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Sperling's Best Places is a good
source of information about crime rates,
schools, weather, and so forth.
- Go to
GreatSchools.net for information
about the quality of local schools.
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City-data.com has discussion forums
about cities and neighborhoods.
Type a city and state into the search
box, and you'll often be rewarded with
local gossip about different
neighborhoods.
- Talk to neighbors.
They can often give you useful
information about a property.
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McCormacks offers lots of useful
information about California cities.
- If you're buying
land, go to the county planner and
discuss zoning restrictions on the
parcel.
- If the home is
governed by a homeowners association (HOA),
ask about monthly fees and CC&Rs. If
you're buying a condo or cooperative
unit, ask to see the association's legal
and financial documents.
- For inexpensive
parcel maps, go to
netronline.com.
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Neighboroo.com has color-coded maps
that let you see how neighboring zip
codes rank in terms of home prices,
school quality, foreclosure risk, and so
forth.
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Zillow.com provides "Zestimates"--rough
estimates of properties values--for
millions of homes. By typing in a city
or zip code, you can pull up a map that
will let you see how property values
vary by neighborhood. Don't put too
much faith in the Zestimates--they can
be wildly inaccurate. But use them
to get a sense of how your target home
fits into the neighborhood. It's
usually better to buy the cheapest house
in the neighborhood than the most
expensive.
- Make sure you've budgeted enough money
to pay the buyer's premium and closing costs.
Read the auction company's terms and conditions to
estimate how much money you'll need to close the
deal.
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| About the
author of AuctionTipSheet.com:
Economist Lori Alden
taught at California universities
for almost 20 years before becoming
a licensed broker. She's also the author of
CapturetheCommission.com, a
website for real estate buyers, and
FSBOPrimer.com, a how-to website
that has been recommended by The
Wall Street Journal, The Washington
Post, and other newspapers. She’s
also appeared as a featured guest on
the nationally syndicated radio show
Real Estate Today.
Alden and her
daughter own several "For Sale by
Owner" (FSBO) websites, including
FSBOSonoma.com,
FSBOSolano.com,
FSBONapa.com,
FSBOAlameda.com,
FSBOContraCosta.com,
FSBOSac.com,
FSBOSantaClara.com, and
FSBOSanMateo.com. Alden
also owns
SixHomes.com, a discount
brokerage for buyers.
Alden has developed
other public service websites,
including
The Cook's Thesaurus, a guide to
ingredient substitutions,
Econoclass.com, a resource for
high school and college economics
instructors, and
EqualShares.com, a website that
explains how to divide property
fairly among heirs, divorcees, and
other. |
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