Discovering how much house you can afford can be complicated and oftentimes, disappointing. Homes are expensive and usually require quite a bit of money upfront. But there are some options for buyers looking for a bargain. If you are considering buying a distressed property, it’s important to learn about the home auction process. Check out the five things you should know before heading to a home auction so you are an educated buyer on your way to getting a great deal.
1. Know What You’re Getting Into
It can be a good idea to locate property auctions in the area where you want to buy so you can attend several “practice sessions.” This is when you go to just watch and see how the process works. Read the terms and conditions, pay attention to the auctioneer’s selling practice and how he or she calls for bids. When you find a property you would consider buying, try to check it out in person if you can. Compare the price and condition of the property to similar ones available through real estate agents and online tools. Then decide on its true market value so you can bid accordingly.
2. Contact a Real Estate Lawyer
Since buying a home at auction is risky, it’s a good idea to enlist the help of an attorney who specializes in these kinds of transactions. If the sale is a foreclosure, the property may come with unpaid tax bills and property liens. While the auctioneer or property owner is legally responsible to disclose this information, an attorney can help you understand what it all means for you.
3. Come Prepared
It’s important to do some work ahead of time. Get pre-qualified for a mortgage from a lender so you know how much you will be able to borrow. When you arrive to the auction, you will have to register so be sure you have identification and enough funds for your down payment and fees. Requirements vary state to state but many auctions require a certified check to prove legitimate intent. Look into your state’s requirements.
4. Don’t Get Caught Up
Your heart rate will likely increase while the bidding heats up, but it’s important not to let yourself get carried away. Have a maximum price you are willing to pay in your head and stick to that budget. Even if you invested a lot of time and effort prior to the auction researching properties, it is not worth it to overbid. If you don’t trust yourself, you can try sending someone else to do the bidding for you.
5. Check Everything
Properties often do not allow tours before the auction is sold, so it’s important to check all your terms carefully. You will likely want to do a full title search on a property and pay attention to any special announcements made at auction that affect the cost.
More on Mortgages & Homebuying:
- Why You Should Check Your Credit Before Buying a Home
- How to Find & Choose a Mortgage Lender
- How to Search for Your Next Home