In today's COVID-riddled world, many foreclosures and REO auctions have gone wholly online. This summer, Auction.com even launched an entire remote bidding feature on its app, allowing investors to bid on live auctions from anywhere in the country using only their mobile phones.
While this certainly makes purchasing these foreclosure properties convenient -- not to mention safely away from potentially infected fellow bidders -- it also comes with some serious drawbacks. If you're considering purchasing an investment property solely online, you'll want to consider both ends of the spectrum before moving forward.
There are clearly some major benefits to buying virtually, particularly in today's environment. First, there's the health benefit. You don't have to venture out to a crowded auction house or shoulder-to-shoulder conference room, and you can bid on properties safely from the comfort of your own home.
More than this, there's also the convenience factor. You don't have to drive or take time out of your busy schedule (or away from your family), and you can bid quickly and easily on the fly -- even while doing other activities.
Finally, there are the opportunities it affords you. With virtual auctions, you're no longer limited geographically. You can participate in auctions in any market and time zone, no matter where you're located. This could mean more potential deals (as long as you're really committed to looking).
Virtual auctions do have their perks, but there are also some major downsides. For one, there's the added competition they create. With properties available virtually, you're no longer competing against Jim and Bob down the street; instead, you've up against dozens, maybe even hundreds, of other investors from all over the country. This could make it harder to find a property or, more importantly, get a good deal on one.
There's also the added risk of buying sight unseen. If you're looking at properties in different parts of the country, you're unable to do even the bare minimum physical evaluation. There's no driving by, peeking in the windows, or checking out the neighborhood. This could mean getting a lemon of a property -- and not knowing it until well after you've put down the cash.
In summary, here's a look at the pros and cons of buying an investment property virtually: