Purchasing land is a hefty investment. So, a lot of investors, or even would-be landowners, try their luck at land auctions. Land auctions are big auctions typically used to sell off substantial plots of land. These can be old farms, undeveloped land, etc.
Are these auctions worth it, though?
Well, they can be your ticket to getting a lot of land cheaply, or they can end up netting you a money pit that doesn’t work out as you’d hoped.
Let’s go over the pros and cons to see if the auctions are a good deal.
The Pros of Land Auctions
There are definitely some positive aspects to land auctions. If there weren’t, no one would participate in them. They can also be great for property flipping.
This doesn’t mean they’re perfect, but they’re definitely worth considering.
Buying land the traditional way can cost a pretty penny. The entity selling the land is obviously trying to get as much as possible to set up their next purchase, or at least be in a better position financially than they were while maintaining the property.
With an auction, you can get a lower price fairly consistently. The property is put up, usually with a reasonable starting price, and then bidders aim to get the best deal possible, keeping the price lower than if the property owner just listed it for whatever they wanted.
Access to Large Plots:
Finding large plots of land for sale can be difficult, nowadays. Major corporations and investors typically have their eyes on publicly sold land that’s in high demand before it even gets put on the market. With land auctions, you can browse a convenient directory of everything that will be auctioned off on a specific date, and there’s no worry about deals being struck before the auction takes place.
Cons of Land Auctions
Land auctions are not perfect. While you can get land far below its actual value, and it’s easy to see what all your options really are, there are a couple of things that hold it back a bit. So the question remains: are land auctions a good deal?
When you invest tens of thousands, or even hundreds of thousands on land the traditional way, you usually want to spend plenty of time doing it. You’ll want to perform multiple full inspections of the land during different parts of the year, look for structures that are extremely expensive to remove, and identify problem areas that will be costly to develop or use.
With an auction, you don’t get the ability. Sure, there will be information about property available, enabling a safe sale if you do your due diligence, but there’s plenty of room for you to buy something that you might have missed and generate additional costs for you.
The point of a land auction, from a bidder’s perspective, is to get a good deal on the land. Unfortunately, a lot of people can participate, and some people will willingly pay far more than what you’d have had to pay in a traditional sale. This is one of the key reasons you should use the Auction Flippers app; all bids are automatic, and this is no longer a possibility.
Finally, there’s a lot more competition. Everyone’s in the same place, bidding at the same time, and things can get heated. You might think you’re about to land a new property, and someone can decide to out-bid you by one grand. Then, it’s gone. That’s just how it works.
Now after you find out about the pros and cons of land auctions, you may conclude whether they are a good deal. If you need more guidance on this matter, contact Auction Flippers today!