How to Buy a House at an Auction
Friday, August 13th, 2010Buying a house from the auction block can be a sweet deal. However, most auction houses use heavy advertising well in advance from the sales date, so be prepared for some stiff competition from a multitude of bidders. To make the most of your auction experience, there are few simple steps to take to ensure that your buying power is secured and your property research is done.
Step one is to get a pre-approval on your mortgage loan and set yourself a bidding budget. Sometimes the auction can whirl the crowd into a bidding frenzy, however, if you are not made of money, you will have to stick to the limit of your loan.
Find an auction house in the county in which you wish to live and take advantage of their pre-auction open house. Some auctions do not offer this service, so be sure you are clear on the rules and regulations for the auction house you will participate with. In addition, you need to find out what their minimum deposit is and be certain that your loan can meet the final pay deadline.
You may also check the property statistics through the APN parcel number which gives a legal description of the property to be sold. It will verify the square footage, lot size, number of bedrooms, bathrooms, year built and everything else a responsible home buyer needs to know.
Some auctions move their properties to the highest bidder with a guaranteed sale at the end of the day. Another auction option is for the home owner to collect all bids and withdraw the property if the final sale price is too low. The Absolute Auction is the most popular with purchasing a residence or commercial piece of property and is a sure-fire sale to the highest bidder. The Minimum Bid Auction requires a pricing floor with the best offer over and above to be taken by the seller.
A Reserve Auction is similar to the Minimum Bid counterpart, however, the minimum amount accepted by the seller is kept a secret. The seller has the right to reject all offers, even to the highest bidder, and therefore, your house hunting adventure comes to a close.
How To Buy a House.org offers a more detailed treatment of this same subject: How to Buy a House at an Auction. Be sure to read that article too.
