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Why Working With A Realtor Is Better Than Buying A Home Through An Auction

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Blog by Ray Smiley | March 9th, 2015

When you are in the market for a new home, one of the ways in which you can decide to buy one is through an auction. There are many companies that specialize in providing such services these days. One of the most alluring things about buying a home through auction is the possibility of buying the home at a much lower price than you would have. This is particularly so if there is not much interest in the home.

However, is this worth it when compared to the typical method of buying, where you simply get a realtor to help you find the home? Remember, you may be very excited about the prospect of buying the home on auction, but then find that it’s not a good idea later on. Some of the things that are usually of concern include:

The terms and conditions can vary

The terms of the auction vary depending on the type of property as well as the type of contractor you are working with. This means that if you are interested in buying a home through auction, you would need to be willing to go through a lot of small print to determine which rules you need to adhere to first. This can be very tiring, particularly if you are thinking of participating in more than one auction.

Working with a regular realtor, on the other hand, is much easier. You only need to talk to them, and they will give you all the data you need to make a decision on which home to buy. There isn’t much to talk about in terms of small print, and if there is the relator will be more than happy to explain it to you.

Inspecting the home can turn out to be tricky

Before buying a home, you will often need to have it inspected to find out if it’s up to your standards. When the home is under auction, this might be trickier than you had imagined. In most cases, you will be required to have the inspection done before you bid for the property. This means that you will not have any idea of whether you have a chance of getting the property or not, but will still have to pay an inspector to do the inspection for you. After you have made the bid, you will not be allowed to do the inspection.

The implications of all this is that you may end up spending a lot of time and money on inspections on homes that you have no chance of getting. When this happens a few times, the losses can add up. When you work with a traditional relator, however, this is usually not a concern. You can have the inspection done at any time you want, which reduces the risk of wasting time and money.

The fact that you need to provide a deposit

After you have submitted a winning bid, you will need to provide a deposit on the amount that you have bid. This is normally a fraction of the amount that you have bid. The major problem with this model is that in some cases, you will have very little time to come up with a relatively large amount of money to submit for the deposit. For instance, if you have made a bid for $100,000, you will be expected to submit a deposit or around half of that in a few days.

Using a regular realtor to buy the property trumps this model on the basis of the fact that you have more time and flexibility when it comes to the deposit. The amounts are also usually lower, with some sellers requiring a deposit of only 10% of the value of the home.

You have no room to change your decision

Once the auctioneer says that you have the winning bid, you will be legally bound to buy the property. This means that if later on you find that it’s not quite the deal you had anticipated, there is very little you can do about it. When you are buying a home, the fact that it’s a major decision means that you need all the time you require to decide on whether it’s a good decision or not. Remember, you may end up having to pay the loans associated with the home for quite a long time. By the time you commit to doing this, you should be sure that it’s what you want.

In summary, you might be attracted to buying a home through auction rather than by working with a realtor on account of the fact that it seems cheaper. However, you should remember that there are many negative things about this model of purchase. By working with a high quality yet affordable realtor in Ottawa, you can benefit from low prices without dealing with the uncertainty of an auction.