• Buying Real Estate

    Buy or Sell Property At A Real Estate Auction

    If you ever wondered how to buy or sell property at a real estate auction house, then keep reading…

    Real estate auctions are not a new type of real estate sale. They have been around for many years.

    Auctions and the real estate agent

    Real estate agents may sometimes recommend a property be placed for auction rather then listing it in a local Multiple Listing Service, typically referred to as the MLS

    Many agents are not aware that when recommending a property be sold at auction, they can continue to maintain a working relationship with the seller. A real estate agent can continue to assist a seller by:

     

    • Being present during meetings with the seller and auction house
    • With draw the listing and receive a referral from the auction house
    • Provide the auction house with property, mortgage and seller information

     

    Typically, the real estate agent will retain the seller as a long term customer by assisting to sell the property quickly and provide advice through out the campaign.

    In addition, buyer representatives can receive a commission on the sale of an auctioned property by submitting a Brokers Participation Agreement to the auction house.

    There may be many benefits of selling a property at auction which may include:

    Properties sold with clear title

    When properties are sold, a title search is performed to verify and validate that there are no outstanding liens, judgments or other issues that can “cloud” a title.

    Selling or purchasing property quickly

    Sometimes, a property may be sold quicker then placing it for sale with a real estate agent. Many factors affect the time to sell a property, which may include: market conditions, property condition, urgency, probate and others.

    Selling a property “As Is”

    We buy houses

    When a property is sold through auction, it is considered an “As is” sale. This means the sale will occur with no contingencies or negotiations. No repairs will be done, simply sold “As is”.

    Seller sets the terms of the sale

    The seller of a property available for auction sets the terms of the sale. These terms include the auction being an Absolute or Reserve Price sale.

    Absolute – An absolute auction is one where a property is sold to the highest bidder, no matter the price. Sometimes sellers may benefit from receiving more then they were hoping; other times they may receive less.

    Reserve Price – A reserve price auction is one where the seller places a reserve price on the sale of the property. If no bids meet the reserve price, the seller may not sell the property.

    The seller is motivated

    Buyers know that when a property is available for Absolute sale, the seller is motivate. This may work in both the seller and buyer’s favor.

    The buyers are qualified and committed

    Sellers know that when a buyer attends an auction, they are ready to buy. Many auctions require buyers present a buyers fee prior to the auction taking place. Only attendees who have paid the buyers fee, may actually bid on a property.

    Buyers control the price they pay

    Buyers may receive benefit from an auction by purchasing a property for less then an appraised value.

    The Auction Process

    The process begins by making the decision to auction the property. Next, either a real estate agent or the seller contacts an auction house. An auction representative will interview the seller and gather and present information regarding the ability to auction the property.

    Some decisions made during this time include:

    Marketing Fee – This fee is typically paid by the seller as an up front cost and may be based on analysis by a specialized marketing team.

    Auction type – Either an Absolute or Reserve price auction decision must be made.

    Sellers’ expectations – Terms and conditions of the sale, Sellers expected price, time frames and fees.

    Once all agree the property is a valid auction candidate and the type of auction is decided, the auction date is established. The auction house will then begin to market the property which may take 4-6 weeks.

    During the marketing campaign and before the auction, buyers are able to perform their due diligence. They can schedule inspections, appraisals as well as view the property.

    Summary

    While real estate auctions may not be for everyone, they do provide alternative methods which may benefit both buyers and sellers.

    When a Real estate agent recommends a property for sale, they can remain involved in the process, receive referral fees and continue to provide quality customer service to their customers and clients

  • Buying Real Estate

    Helping First Home Buyers Understand Different Types Of Mortgages

    First home buyers have a lot to learn when it comes to purchasing a new home but perhaps nothing is more important to understand correctly than the terms of your mortgage. With the wide variety of mortgages available to first home buyers, things can easily become confusing.

    Why First Home Buyers Need To Understand Their Mortgage Terms

    Buying a home is a huge investment. It is likely to be one of the biggest purchases you will ever make and the terms of your mortgage will dictate how you budget and pay your bills for the next 15, 20 or even 30 years. It is vitally important to your financial health to make sure you get a mortgage with terms you understand and, more importantly, can repay.

    Six Different Types Of Mortgages Available To First Home Buyers

    First home buyers have several mortgage options available. Some of them are only exclusive to first home buyers as a way to help them get into their first home, while simultaneously boosting homeownership rates.

    1. Fixed Rate Mortgage. Fixed rate loans have interest rates that never change. You will pay the same amount every month for the life of your loan. The advantage of fixed rate loans is in knowing exactly what your rate and payment are going to be every month, which makes it easier for you to budget your money. You are locked in to this rate even if interest rates change while you still hold the loan. This security, and peace of mind, is one of the biggest advantages to fixed rate loans. If rates happen to drop, you won’t be able to switch to them without applying to refinance your loan. However, it is far safer to be guaranteed your rate not getting any higher than you know you can afford, than to gamble on the uncertainty of, perhaps, saving a few dollars down the line.

    2. Variable Rate Mortgages. Variable rate mortgages or home loans do not have locked in or fixed interest rates. The interest rate can vary with changes in the Reserve Bank of Australia’s interest rate. While this can result in lower interest rates and lower mortgage payments than a fixed rate loan can offer, as soon as the rate changes, your monthly mortgage payment is going to change too. If you can handle the fluctuations of interest rate changes and are willing to take a chance that rates will stay low, then a variable rate loan can be a good way to get a lower interest rate and, hence, lower your mortgage re-payment.

    3. Honeymoon Or Introductory Rate Mortgage Loans. These loans are specifically designed with first home buyers in mind. During the “honeymoon period” you will pay a discounted interest rate on your loan. After the honeymoon period is over, typically 12 months, you’ll pay the standard variable rate. Introductory home loans are a great way to save money during the first year of your homeownership, but first home buyers must be prepared for the possible interest rate increase that follows when the honeymoon period ends.

    4. Low Deposit. These home loans are also a good option for first home buyers. They are aimed at buyers who have a strong income but not much in savings for a deposit. With a low deposit loan the deposit may be as low as 5% of the purchase price of the home.

    5. Low Doc Loans. These loans are a good option if you’re self-employed or can’t provide the typical proof of income needed to secure a home loan. If you have a good credit history, low doc loans may be right for you. They usually have higher interest rates since the risk is seen to be greater by the lender but they are a viable alternative to a traditional loan.

    6. Construction Loans. Anyone interested in home and land packages should take a look at construction loans. These home loans are used to pay for both the land and the home. The builder is paid via instalments, which draws down the mortgage as the home is being built. During the construction phase, the payments are interest-only based on the balance of the loan that is being drawn down. This can be one of the most affordable ways to purchase home and land packages.

    These are just a few of the different types of home loans that are available to first home buyers in Australia. Whenever you’re taking out a loan, take the time to understand the loan repayment requirements and never sign a loan you’re unsure of. Find a mortgage professional you feel comfortable with, who will answer all questions to your satisfaction, ensuring you get the best loan for your needs.