Buying a Home at an Auction

Because of inflated home prices across the country, finding affordable or inexpensive housing is challenging. If hoping to buy a new home at a reasonable and fair price, do not become discouraged. Instead, consider other options such as buying a home at auction. Even though home auctions are rarely advertised, these transactions take place regularly in all areas. The key is knowing where and how to find information about homes being sold at auction.

Although homebuyers may choose to auction their home for a quick sale, many private investors and banks also sell homes through an auction. When a bank forecloses a property, their primary goal is to recoup their money by re-selling the property. Banks have plenty of money; thus, they are not looking to make a huge profit on a foreclosed home. With this said, banks are more willing to accept market value offers on auction homes. Before bidding on a home at auction, consider the following tips.

âÂ?¢ Before attending a homebuyer’s auction, contact a local bank and arrange financing in advance. Pre-approvals are not required for bidding at an auction. However, knowing how much you can afford to spend will smooth the process and provide peace of mind. This way, you can stop bidding if the auction price for a particular home continues to rise.

� Learning about auction times may require a little effort. To limit the number of bidders, some auctions are not widely advertised. Nonetheless, real estate investors and seasoned auctioneers know how to locate a good auction. Initially, browse the newspaper classified ads and look for any auction listings. Because home auctions occur at city hall, there may be flyers posted in nearby areas. If all else fails, contact local banks and real estate agents and inquire about upcoming auctions.

âÂ?¢ Once you’ve obtained a list of upcoming auctions, plan to visit the properties before the bidding war begins. Usually, open houses occur a few days before the auction. Because auction homes are sold “as-is”, having the home inspected beforehand is not required Buyers should anticipate making a few home improvements. However, if the home appears to have extensive damage and may require a lot of upgrades, opt for a home inspection if time permits.

� Establish a bidding limit, and stick to it. If you have obtained financing, do not exceed the pre-approval amount provided by the mortgage lender. Unfortunately, winning bids cannot be withdrawn. Therefore, it is important to exercise caution when bidding. Avoid getting too carried away with the excitement of bidding. By doing so, you may end up buying a home you cannot afford. If you are unable to get financing for the full amount, you will have to pay a portion of the cost out-of-pocket.