How to Buy a House at Auction Top Dos and Don’ts

Buying a house at a housing auction can be a good investment, but before you make this decision, you will need to ensure you know what you’re getting yourself into.  The chance of winning a home like this can be very tempting, but you need to ensure that the property is in fact worth what you are paying for.

Homes that end up in these auctions do so because the property owner did not pay their taxes or defaulted on a mortgage.  The sale price of the property, though, has nothing to do with its value, but oftentimes what the borrower owed on the property.  If you plan to buy these properties, make educated decisions instead.

Steps to Auction Success

The following steps can help you to buy the right house at an auction and not pay too much to do so.  These tips can help you with the process.

* First, know the legal process and work with a trusted lawyer to ensure the transaction goes well.  It is a good idea for you to speak to an attorney about this investment before you make it.

* Sign up to receive notices of auctions.  These often happen in most major cities, but they can occur anywhere.  The key is to look for an auction listing that interests you.  You will find notices of times when you can view the property, if possible, too.

* Before you plan to buy, visit a few auctions and watch the process.  It is important for you to have a good idea of how the process works and what can and cannot occur during the process.  You will want to learn what the requirements are for investing in this way, too.

* In most cases, you will need to have money on hand or up front to get the property.  You may or may not be able to use a mortgage, but if you do, you will need to have a letter from your lender for your pre-approval of the loan.  Check with the auction house to determine what the requirements are.

* You will need to pay for services if you do win the bid.  This includes a title search and any inspection.  However, most properties are sold ‘as is.’  This means that it is unlikely that you can exit the contract if you do not like the outcome of the event.

For instance, if the property is not up to code, you become responsible for it.  In addition, you will likely have to pay any taxes or debts owed on the property in order to take ownership of it.

Bid Carefully!

An auction is an opportunity to buy your dream home for less, but only when you buy a property that is valued more than you pay for it.  Because it is a risky investment, you will need to make decisions about whether or not you can afford to lose your money in the property.

For those with experience and know how in the market, the good news is that this can be a great way to turn a profit.