It is advisable to arrive at the auction well before the advertised starting time. But, as we mentioned earlier, a house being sold at auction is rarely in top condition, so you bump the value down to 80% of market value, then subtract the cost of repairs. Even if you're bold, you may have to unleash your inner gambler to win the home. (Comps are comparable sales, or similar houses recently sold in the same area.) What the Experts Are Seeing, Have 3–6 months of expenses saved up in your emergency fund, Have at least a 10–20% down payment on a 15-year fixed-rate mortgage, Have an additional budget for any immediate repairs needed. You need an agent who cares more about you than their commission check. You might have to prepare for wood paneling. That would be if the house is ready to move into, has beautiful landscaping and top-shelf curb appeal, and the sellers have taken the time to stage the house with a fresh coat of paint and new floors. That will give you a good idea of what to bid. Find expert agents to help you buy your home. At the first auction Thomas attended, shortly after the housing crash, she decided the property wasn't worth the cash. It looks like Cookies are disabled in your browser. | Still, they did—but then, one by one, the higher bidders either dropped out or were disqualified. While Thomas says she would buy her home through an auction again "in a hot second, absolutely," the process was long and arduous. All of that needed to be repaired—and that comes at a price. 10. In an absolute auction, the highest bid wins. These rock stars are excellent agents and are invested in their communities, so they know all the ins and outs of the area where you’re looking to buy. No air conditioning—especially in the summer—could lead to mustiness or even mold and mildew issues. Even if you're not planning on attending an in-person estate auction, a thorough understanding of the market in the area you'd like to buy is essential. But homeowners looking to buy a house at auction need to be prepared for the pitfalls—and having an adventurous spirit won't hurt. Auction homes provide a number of benefits, but the process seems designed for a certain adventurous kind of person, since many of the homes don't qualify for a mortgage. Don't Neglect These 6 Maintenance Tasks—or Else, Debunked! It is possible to get a bargain like that an auction if you know how auctions work and what to look for when you buy a home at auction, and if you’re patient enough to find the right house at the right price. Watch: 3 Types of Homes First-Time Buyers Should Avoid. What do you look for when buying a house? Judging from the variety of homes available in the listings, it sounds almost too good to be true! Homes sold at auction are typically in pre-foreclosure, foreclosure, or have some type of lien on them because the owner fell behind on their home loan with their mortgage lender. "You need to be aware of what the value in the neighborhood is." Start with the market value, which is what the house would be worth in pristine condition. But is it possible to get a good deal at one? All rights reserved. Another biggie: You can't get a mortgage or use a lender. Be patient and brave. We took this question to the pros to tell us what they’re seeing in markets across the country. Home Buying. Looking to become a bidder and score a sweet real estate deal of your own? The best way to bid on a house at auction as a buyer? It’s like the old comedy movies where Jerry Lewis is sitting at an auction and every time he scratches his nose or tugs his ear, the bid goes higher and higher until the next thing you know, he’s bid $2 million for a vase. Property auctions are a good way to land a bargain in a quick sale that avoids a potentially lengthy, conventional buying process.. A purchase at auction is binding as soon as the winning bid is accepted, with all the benefits and drawbacks that come along with it. She paid about $250,000 for the property—an astonishing deal, especially considering that nearby homes without a lien go for nearly double. You don't get to go inside the home before submitting an offer. "I joked that the closet had a lake view," she says. One of the biggest differences between buying a home at auction and the traditional route? 1011 Reams Fleming Blvd Franklin, TN 37064, Is the Housing Market Changing? ©2020 Lampo Licensing, LLC. There are also times when a couple is divorcing and needs to sell the house quickly. Here’s How To Win. But typically, if you’re pretty close, the auctioneer may try to convince the seller to take the deal. This is just what it sounds like: You have to bid a minimum amount to be in the running. A house being sold at auction is rarely in top condition, so bump the value down to 80% of market value, then subtract the cost of repairs. No, Thomas didn't get quite everything she asked for. Find out which six things you can keep an eye out for to avoid ending up with a money pit. But you have to know what you’re doing! In a reserve auction, the winning bid is treated as an offer to the seller, who then has the right to accept or reject the bid within a pre-specified period of time. Find out what similar-sized houses on similar-sized lots in the neighborhood are valued at and—if you can—see exactly what they’ve been selling for. Find out how auctions work and whether or not they 're right for you you that price... High, all-cash bids, not a lender are aware of any alterations as they could have a credit.... 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