How to Buy a House at an Auction

There will always be a home seller or a home buyer. If you are the buyer, purchasing a home from an auction might be your best shot for a great deal. However, you should make some preparations to maximize your chance of getting the property you want at a discounted price.



RESEARCH: Knowing what you are buying will equip you with the best judgments on how to deal with the owners, how much your highest bid will be and your expectations regarding the house itself. Try to get some information about the house. It is much easier to get information on a foreclosed house that is being sold by the owners. If it is being auctioned by the bank or the government, public information may be limited. If you are just looking for a house to buy at an auction, check the title company for information or the county recorder. Also, houses being auctioned are advertised through auction websites. Auction catalogues could also be a good source of information on the reserve price, the starting bid and the maximum price of the house being auctioned.



COMPARE: If a house is foreclosed in a certain area, chances are there are other houses being sold in the same area. The prices of such other properties may be good estimates of the property's actual value. When comparing, assure that you are putting similar properties in comparison. Get down to the specifics- how large is the property, what is the lot area, what are the amenities, what is the estimated cost of repairs and others. For more reliable predictors, compare the property being auctioned with properties lying within 3 miles.



FINANCING: When buying at an auction, it is not always necessary that you are buying with your own money. You could also get financing from money lenders and mortgagors. However, there is a danger to this- you have to pay the interest of their money on top of the total amount of money you are borrowing. That might hurt your finances a bit. Nonetheless, you must be ready to put some money down as a deposit if you win the auctioned house.



PRICING: Once you consider bidding on a particular property, start setting your price limit. Remember that the reason you are at an auction is to save some money while getting the property you want. If you cannot achieve this then it is senseless to buy from an auction. Try not to join a bidding war if it occurs. This will increase the price unreasonably with you on the losing end.



WALK AWAY: To every house that is being auctioned, there will only be one person who will win it over the others. Thus your chances of winning the auction is a lot lower than you might expect so be prepared to walk away.

How to Sell Your House at an Auction

An auction is a popular selling method for houses, especially for the owners of foreclosed homes, due to its many benefits. It is the quickest way with the highest guarantee of sale. Here are some guidelines that will help you determine whether you should auction your house or not.



Which Properties to Sell

There are several types of properties that are best sold at auctions rather than under normal circumstances. They include:



Houses that are hard to sell through conventional means: There are certain types of houses that simply can't be sold through the open market fast. These include those that are in really bad shape and have received no repairs over the years, properties that have very unorthodox designs and those that don't receive good advertisement. All of these types could have a fair chance of getting sold through an auction.



Houses that have no definite value: These are houses that are marked for their distinctiveness but are rather hard to sell on the open market.



Foreclosed houses: Owners of foreclosed homes usually resort to auctioning their houses for faster sale to compensate the expenses, the unpaid bills and sometimes even to save the house itself from being foreclosed.



Highly-demanded properties: Popular houses get exceedingly higher selling prices when auctioned.



Evaluation Period

This entails the process of assessing your property and the potential auctioneer/s. Before you decide to sell it at auction, it is best to shop around for auction houses that fit your requirements. Have your property evaluated first so you'll know what is the reserve price of your house and the total value you should get after the auction. Then, check the price range of the properties that the auctioneer offers. This way, you'll be able to increase the possibility of getting a satisfactory deal for your property.



Properties at auctions are sold as-is but the owner has the option to increase its value first. For example, repairs, doing a bit of cleaning and restoring the property will actually increase its selling price.



Knowing the Cost

Auctioneers don't come free. They charge their clients for the brochures, advertisements and the general services they provide whether the house is sold or not. Also, you might pay a minimum commission of 2.5% from the sale of the house. To get around the unsolicited expenses and the payments that you may not expect before and after the auction, negotiate well with the auctioneer and read everything before signing anything.


Selling Proper

Before offering the house for auction, set the reserve price first - this is the starting bid for the property. Consult with your auctioneer before setting the reserve price. Second, arrange the contract. Finally, prepare the property for viewing by willing bidders.



Selling itself will occur during the auction. Potential buyers will bid on it. The one with the highest bid wins and the sale is official and legally binding.