Whether you’re a real estate professional looking to grow your business or a budding or experienced real estate investor, online home auction sites are changing the face of real estate. Misconceptions about the auction process and the homes sold at auction can make this approach seem daunting to some, but in truth, winning a home online can be pretty easyand rewarding.
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Here are some of the most common misconceptions about online home auctions, along with the facts that disprove them.
Myth 1: All homes up for auction are in terrible condition.
Fact: While some homes sold online can require a little “TLC” others are move-in ready or newly renovated. High-end luxury properties are also sold successfully through auction. Many of the homes sold online are REO properties, which include foreclosed bank-owned homes and short sales, and can provide buyers and clients with great value.
Myth 2: Buyers must pay in full with cash for an auctioned property.
Fact: On Hubzu, an online auction marketplace, buyers can bid with a financing contingency – just like a traditional home sale. It’s all facilitated online, which is convenient and helps to expedite the sale.
Myth 3: Only experienced real estate investors purchase properties through online auctions.
Fact: Online home auctions are being used by everyone from the agent who guides and bid on behalf of a client to the savvy real estate investor. The beauty of online real estate is that anyone with access to the Internet can participate – even by using a mobile device or table.
Myth 4: Buying a home “as is” is full of risk.
Fact: When you buy a home online, the good auction sites will offer an opportunity to conduct due diligence before the deal is closed – providing the ability to visit the house and obtain a home inspection.
Myth 6: Buying a property for auction is complicated and time consuming.
Fact: Online home auctions are typically faster than a traditional home sale and the process is much more transparent. Additionally, buyers are granted more control as online auctions allow participants to view competing bids in real-time.
Myth 7: Online auction sites bid against buyers or create artificial bids to raise sale prices.
Fact: Not all online home auction sites are equal – be sure to check the fine print before you are shop. Hubzu, for example, stands by the notion of a level, transparent playing field and does not engage in the process of “shill bidding” or artificially inflating the price of homes listed on the site.
About the author: Eric Eckardt, is Vice President of Online Real Estate at Altisource.