Mistakes to Avoid When Buying Land At Auction

23 July 2021
 Categories: Real Estate, Blog

If you want to buy a lot of empty land, then you are likely to find yourself attending a few real estate auctions. For better or for worse, this is how a lot of ranchers, farmers, and others who own large tracts of land choose to sell it. You can get a great deal when buying land at auction, and it can also be a simple and seamless way to buy. However, there are some mistakes you'll want to avoid making along the way.

Mistake #1: Waiting until after the auction to secure financing.

Some auctions require proof of financing before they allow you to bid. Others don't, but even if you are attending an auction where proof of financing is not required, you should absolutely get pre-approved for a mortgage before you go to the auction. (Assuming you need a mortgage and are not buying the land in cash.) Banks are not always as willing to lend to land buyers as you would hope. You don't want to bid at an auction, win, and then find out you can't secure the financing to make good on your offer. Securing financing beforehand allows you to bid with confidence.

Mistake #2: Not touring the land until the day of the auction.

You might figure it's just land, and therefore you can walk it on the day of the auction and have a good idea of what you're bidding on, but what if you come across something you have questions about? For instance, what if some land seems low, and you wonder if it's classified as wetlands? You should always walk the land a few days before the auction, at the latest, so you have time to reach out to the auctioneers and ask questions before the bidding begins.

Mistake #3: Bidding more than you can afford.

It's so easy to get wrapped up in the excitement of the auction and end up bidding more than you planned to bid or more than you can afford. Then, you'll be left with land you like, but more debt than you planned on. A good way to prevent this mistake is to bring a friend with you to the auction. Tell them how much you plan on bidding, at most, and ask them to stop you if they see you thinking of bidding any more than that. 

Buying land at auction can be a great way to get a deal. Just make sure you avoid the mistakes above.

If you are interested in buying land, look around at upcoming land auctions in the area you are wanting to buy.