While the traditional method of trawling for sale listings, making bids, and negotiating with the seller has been a popular rite of passage for many home buyers, buying a house at auction is swiftly becoming a favored way to purchase property.
Buying a home through auction can be tricky, so it’s best to do your
research and keep your cool on auction day, lest you find yourself stuck
with a less-than-ideal place to live for a price you didn’t expect to
pay. If you’re in the market to buy through auction for the first time,
here are some things you need to know.
How To Find Houses Up for Auction
Real estate agents will often use the same methods to sell a house by
auction as they do in a traditional sale: adverts in newspapers and
online, posters in their office windows, and signs outside the property.
Depending on the reason for the sale, a home auction may be held at a
local courthouse, an auction house, or, in some cases, online.
Viewing A House Before Auction
It’s always best to try before you buy, so make sure you are able to
view the house prior to the auction. Some real estate agents will insist
on exterior views of the home only, but, if you’re a new buyer, this
may not be enough.
Seasoned home buyers can often pick a house by looking at the
exterior and reading a description; buyers new to the game should bank
on seeing inside first.
Checking The Price Of An Auction
Look into the price that is offered for the home you seek to buy;
sometimes, if a house is in foreclosure, the starting price of the home
may be the balance of the mortgage, or a lower price to get people to
begin bidding. Lenders, such as banks, are not permitted to make a
profit from selling a foreclosure and may often sell homes at a loss;
look out for these bargains when checking house prices in your local
Bidding At An Auction
On auction day, make sure you enter the auction knowing the general
value of the house and the maximum amount you are willing to pay; having
these parameters set out will help prevent you from getting swept up in
the auction process and bidding more than what you have or what the
house is worth.
On the day, bring a cashier’s check—auction holders ask winners to
pay for auction fees, bidding fees, and a deposit on the purchase. If
you are successful on auction day, you will then have to close the deal
with the seller just like any other property purchase.
If you need financing, you may wish to be pre-cleared by your lending
company before the auction. Also, be aware that your winning bid may
not be accepted. Many homes have a reserve price, and if the reserve is
not met, the house will not be sold on the day.
If you are interested in buying a home through auction, go into the
process knowing that auctions can be riskier than buying a home via
traditional means. Also remember that just because a house is up for
auction doesn’t mean you are guaranteed a good price. Some houses sell
for a lot of money, and others sell cheaply but have hidden costs, such
as urgent maintenance.
When you’re ready to find your new home by auction and finance it,
call your local trusted mortgage professional for information.