Buying Real Assets Virtually

The recent housing crisis  put more condos into foreclosure than the market seemed to know what to do with – until recently, when the smart money began turning up at auctions to buy properties for 50, 60, or sometimes even 70 percent less than original asking price. But who has the time or local expertise to work the courthouse auction circuit?

Online real estate auctions provide a convenient way for retail buyers and investors in condominium properties – some foreclosures and others just inventory that developers or sellers are looking to move in a hurry – to bid on them without having to buy through a broker or moonlight as auction-goers.

Today's online real estate auctions operate just like conventional auctions except in that the bidding takes place online, either live or through an agent. Most often, a list of properties is provided in advance so that prospective buyers can take a look at the properties in person or else send their own private appraiser.

The most experienced investors are sometimes satisfied merely through an online tour, though it is recommended that anyone see a property in person before bidding. Come auction day, bidders can place maximum bids that will be automatically entered or else they can bid live as they see the bidding action unfold.

There are certainly merits to each form of bidding. The former method is more convenient for would-be bidders and also ensures that emotion does not get the best of bidders – i.e., that they don't find themselves extricated in a bidding war. The second approach, however, has its practitioners, who like to get a sense of the market and see how much comparable condominiums have gone for in the same auction as a basis for setting their bids.

Regardless of how one chooses to participate in an online auction, the format represents an easy and effective way to buy a home or invest in income-producing property. And because auctions are representative of a much smaller market of buyers than the overall real estate market, there is opportunity for buyers to make out with even better deals than the current market provides.

Sellers also appreciate the format since there are lower commissions, so even if he or she gets 5% less than an official asking price, lower commissions will make up for the difference and allow them to dispose of the property more quickly than if it were left on the open market.