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Top 5 Mistakes to Avoid When Bidding in Online Real Estate Auctions
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- Andres McBeth
- 2025-05-24T21:25:00Z
Online real estate auctions have opened the door for buyers and investors to access discounted properties, transparent bidding, and faster closings. But while the opportunity is real, so are the risks—especially if you jump in unprepared.
1. Bidding Without Doing Proper Due Diligence
- The Mistake: Jumping into a bid based solely on photos or price.
- Why It’s Risky: Many auction properties are sold as-is, and skipping inspections or title research can lead to costly surprises like liens, legal issues, or major repairs.
How to Avoid It:
- Review all disclosures, inspection reports, and property summaries
- Run a title search or work with a title company
- Understand neighborhood comps and zoning restrictions
- Drive by or schedule a walk-through if allowed
2. Ignoring the True Cost of Winning
- The Mistake: Winning the auction—then realizing you paid more than you thought.
- Why It’s Risky: Many online auctions include a buyer’s premium (often 5–10% of the final bid) and non-refundable deposits. Add that to closing costs, repairs, and financing, and the “deal” might not pencil out.
How to Avoid It:
- Read the full auction terms & conditions
- Add buyer’s premium to your total bid limit
- Factor in taxes, escrow fees, and potential renovations
- Use a deal analyzer or ROI calculator before bidding
3. Not Understanding Auction Types and Rules
Why It’s Risky: Auction formats vary—some have reserve prices (minimum sale price), while others are absolute (no reserve). In some cases, the seller must approve the winning bid after the auction ends.
The Mistake: Treating every auction the same.
How to Avoid It:
- Know if the auction is absolute, reserve, or subject to confirmation
- Understand how bid extensions work (some platforms auto-extend if a bid comes in during the last minutes)
- Make sure your financing is ready if required
⏳ 4. Waiting Until the Last Minute to Bid
The Mistake: Planning to swoop in and win in the final seconds.
- Why It’s Risky: Many platforms have anti-sniping rules, meaning last-minute bids extend the auction by several minutes. If you're not watching closely, you could miss your chance.
How to Avoid It:
- Set alerts and monitor your target property closely
- Place strategic early bids to stay in the game
- Don’t rely solely on last-second timing—set a max bid strategy and stay alert
5. Letting Emotions Take Over
The Mistake: Getting caught in a bidding war and blowing your budget.
- Why It’s Risky: Auctions are exciting, and it’s easy to overbid in the heat of the moment. But winning a property at the wrong price can lead to negative equity, cash flow issues, or failed flips.
How to Avoid It:
- Set a hard budget and stick to it—no exceptions
- Use a max auto-bid feature (if available)
- Remember: there’s always another auction
Conclusion & Call to Action
Online property auctions offer incredible opportunities—but only if you play it smart. By avoiding these five common mistakes, you can protect your investment, win better deals, and build confidence with every bid.
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