How to Buy a House at Auction

If you’ve come here looking for how to buy a house at auction, you’ll need to know the first question you should ask/consider. Why is the house up for auction? With all the other ways to sell houses, why would anyone choose this method? The answer is generally that it is the lender or the government that has placed the house at auction for one of two reasons. The first is that back taxes are owed and the property has been seized, and the second is that the mortgage payments have been unpaid to the point where the lender has foreclosed and therefore repossessed. Neither lenders nor the government is in the home ownership business, so both would like to sell as quickly as possible.

What kind of houses go to auction

Contrary to what many might assume, there are many kinds of houses that can be found at auctions. True, some may have problems with upkeep or with the area of location, but in a downward economy, even beautiful homes in great areas can be found. And they can be purchased at great prices.

Where to find houses at auction

The way to find properties for auction is by looking in the newspaper classifieds, calling or contacting auction houses, and writing to, calling, or visiting city collectors to get information about upcoming auctions. One of the best ways is to visit the place where an auction is taking place and inquire there. You can ask to be placed on their mailing list, and they may offer help with locating other auctions or auction houses.

How to prepare for a house auction

Some auction houses, but not all, offer a preview of the house at a date before the auction. This is the best way to minimize some risk. For such a preview, you will want to be knowledgeable of what to look for or to invite along a friend who is. Where there is no preview, the risk is greater, and if you are not familiar with people in the area who may help with knowledge about the property, you will want to look for a significant discount to buy. Other necessary information can be found at the registry of deeds in the city where the house is located, and it is best to visit them.

Know the conditions of the sale

First, how do you pay? There is a minimum amount which must be available at the sale, and this is generally in the amount of $500 to $5,000, cash or certified check, but check with the auction house in advance to be certain of the method of payment. If you win the bid, the balance will need to be paid in full within a short amount of time, usually 30 days. A pre-approved mortgage for an auctioned house is difficult to get, so often the payment must be in available cash.

Be Careful

There are penalties often as high as 25% of purchase price if full payment can not be made. Also, when buying a house at auction, know ahead of time what you are willing to pay and resist temptation to bid higher.

For more information on how to buy a house at auction we suggest navigating additional pages of our site, and also referring to large websites such as wikipedia.org.