Thread: Buying a house from an auction

If you can't get the loan you lose your 5% deposit. Try filling out the loan application and get the loan approved pending a house to attach it to.

Yes, if you can not secure the loan, generally the earnest money is non-refundable.

It is best to have your real estate agent check the contract and be sure to read all the fine print.

Auctions can be outstanding ways to purchase homes, however I have seen many where there is a reserve that needs to be met.

We have found here in Minnesota that the MLS also has some outstanding deals. Tons of homes, condos, townhomes for sale!

I hope this helps.

Home auctions are not for the novice home buyer. Most of those attending are expert investors who arrive in large groups to bid on the best deals. Make double sure you inspect the home you're interested in bidding on days in advance. The photo they show at the auction is deceiving. Most of those homes are actually in ruins, run down, or are located in a dangerous neighborhood which isn't worth investing in and much less living in... Be cautious and careful. Investigate and investigate. I've been to a few to view the goings on. I'll never go again.

Originally Posted by oneofthecrowd

Home auctions are not for the novice home buyer. Most of those attending are expert investors who arrive in large groups to bid on the best deals. Make double sure you inspect the home you're interested in bidding on days in advance. The photo they show at the auction is deceiving. Most of those homes are actually in ruins, run down, or are located in a dangerous neighborhood which isn't worth investing in and much less living in... Be cautious and careful. Investigate and investigate. I've been to a few to view the goings on. I'll never go again.

Now this calls for second thoughts. Is it really that bad? Ive only been to one so far. Its 'so-so' for me. But I was aware of the discrepencies as far as photos are concern before I went...

I agree. I believe that auctions are for those who know exactly what they're doing and what they're getting themselves into. It's not as easy as the tv commercials make it.

I will suggest you to get the loan approved prior to the participation in the bid because if in case you don

I've attended auctions, and they are a good learning experience, and if you never had atteneded one, and you are interested in bidding, YOU NEED TO attend a few, just to watch how the procedure works.

It is simple, and you will notice several "regulars" that bid. It would amaze me sometimes when they would walk in with a breifcase full of CA$H! (Generally people give cashier's checks, but this one investor would come in with THOUSANDS in cash everytime.)

Anyway, what others are saying is true, you will lose your 5%, and you do it enough times, and you will not be taken seriously at the auction. Sure they get free $$, when you default, but it is still a burden to repost the listing and reacution off the house. Reminds me of a bidder who "won" and when it came to settling up (10% in WI,) they didn't have it. I could have sworn the sheriff unlatched their firearm for a second. (Well, maybe not, but they were NOT happy.) They had to restart the bidding, and of course they were not allowed to be in the room.

I suggest that you go to several auctions, start talking with the "regulars" ask them questions (but don't waste their time.) Once they see you bidding and winning a few, the "door to their world" will be opened to you, and you will get a much better welcome from them. People that don't bid are hard pressed to get them to answer questions. Maybe take them out to lunch or something... Make it worth THEIR time. Maybe even ask them how you could help them out, maybe they will give you some of their "dirty work" tasks to do, and that is the best way to learn.

Auctions are not for the ill-prepared. You better have a line of credit or some how access to the funds to close, and trying to get a conventional note IS NOT the way to go. You only have a few days after the auction to close, and a conventional loan could take AT LEAST 30 days, and that is if you had your loan officer really pushing it through, and your credit was near spotless, so there was minimal delays, and when the house was appraised it is worth more than what you paid for it. FAR TOO MANY variables. You need to have the funds lined up before you bid... Simple as that!

Did I go off on several tangents? Sorry!

Later!

Plan B hard money. If the loan cant close in time or they need some repairs to close use hard money. Need to be carful. Most banks are not lending more the 80% of the purchase price. If you use hard money your loan form the bank will now be a refi not a purchase. Ask your lender if this is a possibility and if there are any ways around it if you use hard money.

I heard there have been some instances that regular bidders try to talk you out of bidding. Instead of opening their `doors' to welcome, they kinda show you the way out.. especially if you are a stranger in the auction. Anyone had any experience?