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Luxury Home Auctions and You

new-constructionMany people are familiar with home auctions held for foreclosed homes, but not as many people realize that high-end luxury real estate sometimes comes up on the auction block as well. Luxury homes can wind up getting auctioned for many reasons, and many of these situations can benefit the consumer. Here is a look at how and why these properties sometimes get auctioned and what you can do to take advantage of the situation when the opportunity arises.

The Whys of Luxury Auctions

The most common reason for luxury properties to get auctioned to the public is the same reason as other homes: foreclosure by the bank. This has become less common since the housing bubble burst, but there were a number of individuals living above their means not so long ago, which caused an influx of these auctions to occur. Now that this reason has become less widespread, another reason for home auctions has arisen: estate planning errors. In this case, a luxury home might be reasonably affordable, but the lack of a will when the owner died or a decision by the inheritors not to continue with the property forces it to the open market. Finally, some homeowners resort to auction when they are unable to move their luxury home at the price they thought it would be worth.

Pros and Cons for the Buyer

The biggest benefit to the buyer when it comes to luxury real estate auctions is the fact that a home can often be purchased for much less than normal. However, there are also some significant risks to deal with. For starters, most of the homebuyer protections that are built into a sale don’t occur with an auction – homes are typically sold as-is and there is no owner you can negotiate with. This also means that you don’t get the advantage of speaking with somebody who has lived in the house who would normally be able to tell you the ins and outs of the properties.

Signs of a Coming Auction

If you are interested in seeking out a luxury real estate auction despite the drawbacks listed above, there are a few things you can keep an eye out for. If you notice that a home you might like has been on the market for a long time with no buyer, you might want to keep an eye on auction listings. At the same time, you can do research on the specific home that might be auctioned by asking for a tour before it hits the auction block. The more you know about a potential property, the more informed a decision you’ll be able to make.

Remember that once a home goes up for auction, it’s open to everybody who wants to bid. That means that even if you can get a home at a bargain, it might be desirable to lock it up while you have an opportunity so you won’t get outbid. That said, it’s always good to keep in mind the chance of an occasional luxury real estate auction.

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