By Ridham Gada
In today’s digital age, many of us have experienced the convenience of purchasing products online through e-commerce platforms. Some may even have ventured into online auctions, such as those on eBay. However, what might come as a surprise is the ability to buy a home online, thanks to apps that facilitate participation in e-auctions. These platforms operate similarly to traditional auction houses.
The integration of technology in real estate transactions began a couple of decades ago with the introduction of digital property listings. Today, it has become the standard practice, with over 90% of homebuyers using the internet to search for their ideal properties. Digital real estate listings not only provide property details but also offer comprehensive information about the surrounding neighborhood, including schools, hospitals, markets, parks, and public transportation options. This wealth of information empowers buyers to make informed decisions about a location without physically visiting it.
The emergence of online real estate auction platforms has revolutionized the property market, generating interest among sellers and attracting a wide range of buyers. These platforms offer several advantages compared to private sales or traditional estate agents. In this article, we will delve into the key aspects of online property auctions.
Understanding Online Real Estate Auctions
Online real estate auctions are typically initiated when a seller needs to quickly sell their property, often due to personal reasons or mortgage defaults. The seller aims to secure the highest possible price to minimize losses. Several auction categories exist:
1)Absolute Auction: In this category, a property is sold to the highest bidder, even if the winning bid is significantly below the property’s actual value.
2) Reserve Auction: This type occurs when the owner or lender sets a specific price at which they are willing to sell the property. If the bidding does not reach this predetermined amount, the property remains unsold.
3) Minimum Bid Auction: Similar to a Reserve Auction, the lender or owner sets a minimum starting bid, and the highest bidder ultimately wins the property.
Following the conclusion of an auction, the seller must accept the winning bid, a process that can take a minimum of 15 days or longer. In some cases, a property may need to be re-auctioned to reach the desired bid amount.
When buying a home through an online auction, buyers typically avoid real estate brokerage fees. However, it’s essential to be aware that there may be various costs associated with online auctions, which can vary from one platform to another.
Buyer Rights in Property E-Auctions:
Participating in e-auctions comes with certain rights that protect buyers in the virtual space. Buyers have the right to access complete and accurate information about the property, including specifications, legal documentation, and photographs. Additionally, they have the right to transparent communication from the seller, ensuring well-informed decision-making.
Equally important is the right to a fair and equal opportunity. E-auctions are designed to create a level playing field for all participants, allowing every bidder to compete fairly without external biases, fostering transparency and competitiveness.
Exercising Caution:
While e-auctions offer unmatched convenience, caution remains crucial. Before participating, buyers must conduct due diligence. It is essential to verify the legitimacy of the digital platform, with reputable apps offering secure payment gateways and robust data protection measures.
Understanding the auction’s terms and conditions is imperative. Buyers should carefully review the auction process, bidding increments, and potential fees. Thorough research on the property’s title, location, and condition is also essential.
As technology continues to reshape the real estate sector, property e-auctions are emerging as a progressive and convenient alternative to traditional transactions. Through digital apps, individuals can navigate the complexities of buying and selling properties with newfound ease. Buyer rights in this domain ensure a fair and secure process, emphasizing the need for cautious diligence when exploring the e-auction landscape. Embracing these transformative tools and practices is paving the way for a future where property transactions are streamlined, transparent, and accessible to all.
(This artcle is authored by Mr. Ridham Gada, Partner at Prem Group, and the views expressed in this article are his own)
