How to Buy a House at Auction
While buying a house at auction may sound like a fun way to get a great deal, there are many details you must become familiar with before getting involved.
Like many, you may be interested in buying a foreclosed home at auction. Despite the fact that you will likely have competition, if you are the highest bidder the property will be yours when everything is said and done.
Where do Home Auctions Take Place?
Generally speaking, most real estate auctions take place on the county court house steps in the county where the home is located.
If you are interested in attending foreclosure auctions, contact the county for more information while also keeping an eye on your local newspaper. Auctions will likely be advertised.
Tip: an agent with experience in this area can help you find out about auctions in advance.
Do I have to Pay to Participate in the Bidding?
Upon registering to bid, you will be required to provide earnest money or a deposit. This shows that you are serious about participating and have the money necessary to close the deal. Earnest money fee can range from a couple hundred dollars to $5,000 or more, based on the area in which you are bidding and the value of the property.
What should I take with me?
In addition to your earnest money or deposit, you should consider taking your real estate agent with you to ensure that you don’t overspend on a property.
The key to getting a good deal is being prepared and knowing what the property is worth. Along with your agent, take along any research material you may have. This can include everything from a detailed history of the home to comparable sales in the area.
Bidding at a Home Auction
When bidding on a home at auction, there are several tips you need to keep in mind:
- Set your budget and then stick with it.
- Don’t let other bidders influence your better judgment.
- If you are interested in a property, wait until the bidding dies down before you jump in on the action.
How to Complete the Purchase
Just because you won the auction doesn’t mean you are now the owner. You are required to complete state mandated forms after the auction. These forms will include all the documentation you need to complete the purchase, no matter if you are buying with cash or financing the property.
If you plan on using a mortgage loan to purchase the property, make sure you are preapproved before the auction.
Can I opt for a Home Inspection?
Since you are bidding on the property and making a decision on the spot, you will not have time to complete a home inspection. Typically, you don’t have the ability to walk away from the deal if you find that the home has something wrong with it.
Once again, this is why you want to do as much research as possible upfront.
What if the Property doesn’t sell?
If a property is not sold at auction, if is oftentimes handed over to the lender for sale at a later date.
Note: in some cases, another auction for the same property may take place again in the future.
Real estate foreclosure auctions take place all over the country on a regular basis. With this advice, you should have a better understanding of what to expect when attempting to buy a property via this method.