Buying a home is one of the most important things that we do as adults, and also the most expensive. Buying a home at auction is a wonderful way to offset some of those costs, and in some cases, save a ton of money. The houses that are up for auction are often properties that are government owned, or owned by the lending bank. In many cases, they are simply trying to recoup their losses on the houses for auction, and this translates into huge savings for the auction buyers. In spite of the potential for savings, there is also a danger of being taken if you do not do your homework. Here is how to make sure that you save money when you buy a home at auction:
1. Work out your financials before you even begin looking for that home. You do not want to bid on a home and then be rushed in finding the mortgage that fits you. Get the preapprovals for a mortgage in place, and then stick to the limitations you have set for yourself. Knowing what you are willing to spend is priceless at home auctions.
2. Once you have your financial house in order, and your preapprovals in hand, then start looking for home auctions in the area you want to live. You can find these from real estate agents, auction houses, and even through the Internet. Simply search for “home auctions” and you will quickly find some options in this way. Also, getting to know the local auctioneers does not hurt either. They often will contact you when things come along that fit your search.
3. Never bid on a house up for auction that has no opportunity to view the property thoroughly. These are not very common, as most auctions will afford you the chance to know what you are bidding on. Chances are any property that is being offered without this option is a problem waiting to happen. Walk through every property and ask plenty of questions. Buying an auction home should not ever be a blind purchase.
4. If the option is there, pay a professional to inspect the auction house property up for bid. This costs a good deal of money but could save you thousands. If you can possibly afford to do so, the money is worth every penny.
5. On the day of auction, bring a trusted individual to keep you at your limit. It is very easy to get wrapped up in the bidding and lose control if you are not careful. Set a limit and stick to that limit. If you feel as though you can not do that, then have someone go in your stead. Auctions are only offers to buy. They are no different than making an offer and then walking away if it is not accepted.
6. Do not bid if you can not pay. Not only is this a problem from a legal standpoint, but you are also costing others the chance to pick up the property. Be mindful that the property is up for auction and that everybody else is there for the same reason. Do not bid on the hopes of financing. Have your preapproval, and do not exceed it.
7. Make sure that you know the reserve auction price. Most properties have a minimum they will take. Know this ahead of time so that you can bid in an informed manner. Also, ask and inquire about any fees to the auction house. These are often payed by the winning bidder in excess of the winning bid. Find out so that you can figure it into your maximum bid.
8. Follow through with all bids promptly and make sure that you ask questions to make sure you are covering everything. No question is a bad question at your first auction. It is important that you be very thorough and take care of business.
9. Be gracious if you do not win the auction.
Winning a house to buy at auction is an exciting and potentially frugal way to buy properties. If you do your research and come prepared, you might just find the deal of a lifetime.
