3/21/2007

Buying a Home at Auction


With more talk about foreclosures, there’s more awareness of buying a property at auction. But it’s important to do your research first if you think you want to buy a property this way. You need to get information about the property, i.e., amenities and square footage, how much is owed against it, and what is the expected opening bid, either required or suggested.

Have your financing already in place, and be prepared for the required deposit for an accepted bid. Your financing must be in place within a specified period of time.

Price at an auction is based on the loan amount owed plus fees and expenses that the foreclosure process has incurred. It may be less than market value, but realize that once the lender owns the property, it may sell with the help of a real estate broker or through auction.

You usually have to have the money in hand and your loan ready to fund. Each auction has different time requirements.

Most of the time, you don’t have the option of getting inspections and may not see what you’ve bought until you’ve bought it. Most homes are sold in “as is” condition without any warranties of any kind. There are no disclosures or guarantees. There are some auctions where you are allowed an advance preview which may afford an inspection.

Consider all your costs, including the auctioneer’s fee and taxes owed against the property. And during this time, all your research could be wasted (is any knowledge really wasted though?) as the borrower may be able to cure the loan at the last minute!

Last but not least, a property sold at auction may not have clear title, depending on how they are sold. There could be various liens and encumbrances which could require a lot of work to clear up.

Be prepared, if necessary, to walk away. If the deal is not right for you, it’s not a deal.

Information courtesy of eHow.com.



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