Generally, auctions are events structured to sell a piece of property, be it land, artwork or a family heirloom, generating the maximum profit for the seller while allowing the buyer to refuse to pay a price beyond their budget.
Buyers typically make a bid on the auctioned property. Bids escalate between the buyers until no buyer is willing to bid any higher. The highest bidder "wins" the auction, assuming ownership of the item in exchange for the agreed upon price.
The auctioneer serves as an agent between the buyer and the seller. The seller ultimately retains the selling price, paying some sort of commission to the auctioneer. By allowing buyers to compete, the theory is the seller will receive the highest possible price on the item. For those looking to invest in land in Minnesota or Wisconsin, land auctions can be an ideal opportunity to pick up a valuable piece of land for an extremely reasonable price.
Many land auction companies may even allow bids to be received online, via e-mail, by phone, fax or even text message for the convenience of their customers. While land auctions can be a valuable resource for both buyers and sellers, there are some potential issues to be aware of before entering your first bid. Successful participation in a land auction is partially the result of luck; however, there are some concrete steps that you can take to help protect your interests when purchasing or selling property in a land auction. If you are familiar with E-bay, you are familiar with the concept of an online auction. If you are considering a purchase of land via an online land auction, you should be very cautious that you are dealing with a reputable company. Check with organizations such as the State Attorney General's Office, the Better Business Bureau and other individuals who may have had prior dealings with the auction company. It is always a good idea to have an attorney to look over and modify any real estate transaction before signing on the dotted line.
Some online land auctions are scams, or are attempting to sell off property with serious environmental or accessibility issues to unsuspecting consumers. Others entice you with incredibly low minimum bids, in the range of $100.00 to $200.00. Upon closer inspection of the fine print, you will see that such low minimum bids are often the bid for your down payment amount on a property to be sold for $5,000, $10,000 or even $100,000. You must be particularly cautious when looking to purchase property through a land auction when you are unfamiliar with the area in which you are looking to purchase. Online transactions from afar, without proper inspection of the property, may leave you with land unlikely to appreciate as a result of its location or condition. It is important to spend the time and money to travel to the location to inspect the property for yourself. If you cannot personally inspect the property, hire a non-interested, third party inspector to provide you with a report about the property's condition and necessary repairs.
When bidding in any type of a land auction, consider how much you actually know about the property. Are there environmental or zoning concerns likely to impact your intended use of the property? If there are buildings on the property, what type of improvements must be made, or are the buildings even salvageable? You must calculate the costs of repairs, improvements, demolitions and remedial environmental measures when determining whether you can afford a particular parcel of land. What type of financing, if any, will you require? Is the property subject to any type of tax or judgment lien? Are there any government easements or right-of-ways existing on the land? Such considerations can have a dramatic impact on the land's current and future value and should definitely be evaluated prior to making any commitment to purchase.
When engaging in a land auction, keep in mind that everyone else there is also looking for a valuable piece of land at a reasonable price. Do not become too invested in a particular property such that you lose the ability to objectively and rationally evaluate the situation. Carefully consider all aspects of the purchase before making a commitment and consult with real estate and legal professionals to protect your interests. Be particularly cautious in the context of an online land auction. Provided you make sure you are dealing with a reputable company, read all of the fine print and do all of your homework before entering into any type of contractual agreement to purchase or sell real estate via land auction, it is possible to purchase a wonderful tract of land for an incredibly low price. Feel free to contact LandBin.com to investigate the possibilities of land auctions!