About Property Auction
Property auction is a method of buying and selling of real estate through an open, transparent and competitive bidding conducted by licensed auctioneers. Potential property buyers can comfortably put in their bids without worrying about manipulation or any undesired tricks.
Generally, there are lots of advantages of acquiring properties through property auction in high courts, land offices or in an appointed licensed auctioneer office.?Some of the advantages are as listed below:
1.Competitive bidding with equal opportunity
The property is set to be auction off on a particular date and all interested parties can bid in an open and competitive environment, with the highest bidder securing the property. The competitive bidding will create confidence among potential bidders when they see that others are also willing to pay a similar amount for the property.
2.Creates a sense of urgency
Once the date of the auction is set, prospective bidders must start to prepare themselves e.g. survey or inspect the property, do a land/title search and prepare a bank draft. During the auction, the prospective bidders are forced to make an on-the-spot decision of how much they are willing to pay for the property. They cannot afford to think about it or say let you know tomorrow.?
All the legal work and surveys are usually completed prior to the auction date and stated in the Proclaimation of Sale. This will speed up the purchase and completion process which usually takes a long time in a normal sales and purchase transaction.?Besides that, lengthy negotiations of price and terms of conditions to the sale of property are also eliminated in an auction environment as the properties are sold on an it-is?basis.
An auction property is usually valued by a licensed property valuer prior to the auction date to determine its current market value. This market value will reflect the reserve price during its first auction. If the property is situated in a very good location and there is a high demand for it, the property will eventually be sold at a price higher than its market value; which would be a gain for the seller. However, if the property is not sold during its first auction, the reserve price will be reduced by a certain percentage during its second auction.?If it is still not sold, the reserve price will be reduced further during its next auction until the property is sold off. Investors can gain great deals by buying up these properties which are priced at well-below market values.
5.Safe and fast purchasing
The successful bidder does not have to worry that the purchase will not go through because the contract is usually binding once the hammer falls. Unlike a traditional sales and purchase transaction, a seller can still pull out as long as the transaction is not completed. This is not the case with auction properties.?After paying the initial required deposit and securing the deal, the successful bidder will have to sign a binding contract and will be given 90 to 120 days to pay up the balance purchase price and complete the sale.
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