The risk of buying real estate online

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Auction.com is one of the world’s biggest online real estate marketplaces. Since 2007, it has accumulated billions by selling properties in a platform that’s easy to use and offers buyers the chance to own property at a cut-rate price. It is state-of-the-art technology that continues to expand the rapidly growing possibilities of buying real estate on the Web. 
At first glance, it may seem a sound alternative. It presents a streamlined approach to buying and selling that in many cases promotes transactions closing within 60 days. Unfortunately, as convenient as it may sound, those who have a background in representing buyers and sellers know real estate transactions conducted through online auctions come with risks. There are disadvantages to using a site like this to buy and sell property. Here are a few you should be aware of to caution clients interested in online transactions.
  • In a traditional real estate sale, all financial transactions are dealt with at closing. An online auction has fixed costs, making it potentially more expensive than a traditional transaction using a real estate agent. And the fees will apply whether the property is sold or not.
  • The pre-auction phase can lead to an unexpected rush of people curious about the property. A seller is contractually obligated to allow any interested party to view the premises and to make the property accessible to any surveyor who wants to value it for a client. This can turn into heavy traffic in the weeks before the auction.
  • Any online monetary transaction comes with risk. Even the most secure online marketplace is prone to the types of fraud that run rampant on the Internet. A buyer can win a bid, pay and find himself on the bad end of a phony sale. It’s not unusual for those with ill intent to use these venues to grab some big property sales and then disappear.
  • A lot of sellers don’t take note of the timeline they have to get off the property once the sale is complete. It can be as little as 28 days after the auction. This doesn’t leave much time for relocation.
  • A property’s value is determined by the market, and a seller can decide the minimum price on the property. With an auction, the property’s value is based on the highest offer—if you find a buyer at all—and the seller is stuck with that price. A reserve price can be set, but that only minimizes financial risk, not eliminate it. The only way to ensure maximized value for any property is through a traditional real estate transaction.
Overall, a buyer or a seller is taking both personal and financial risk when utilizing an online auction to purchase or sell property. Real estate agents have the guaranteed resources to protect a client’s interest.

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