What to Know About Buying a House at Auction
Did you know that more than half of homes for sale are going under contract in less than two weeks?
Fifty-six percent of buyers also report facing intense bidding wars in their offers. That’s 4% more than it was in just December.
For long-time home searchers like you, that might mean you haven’t bought a home yet, even though you want to—because you keep getting outbid. The competition for home buying is especially stiff right now, and the number of available homes seems to be dwindling.
What does that mean for you? Well, buying a house at auction could be one solution to your bidding wars problem. Here’s how.
Why Buy a Home at Auction?
Of course, there’s still competition there, too—but you might find less of it.
Home auctions have commonly been cited as a place to snag a deal. That was especially true during the 2008 housing crisis. It’s less true now, but still possible—you might be able to get a home at a significant discount, depending on factors like how it wound up there, who’s selling it, etc.
Home auctions, even with a rise in popularity, still garner less attraction and therefore fewer bidders. You can bid on a home in-person or online, both of which are swift transactions (anywhere from one day to a couple of weeks, tops). You may find the process less stressful than working with a real estate agent—as long as you prepare well ahead of the auction.
How Do Homes Go Up for Auction?
That depends. Homes typically go up for auction in one of two ways:
- The homeowner doesn’t pay their mortgage and the home gets foreclosed and seized by the bank
- The homeowner doesn’t pay their property taxes and the home gets seized by the tax authority
Perhaps the homeowner tried to work with a company that buys houses fast but didn’t do so in time, and their home got taken from them. Because of this, you might find the auction price to be less than it’d normally be—typically, it’s at least the cost of the debt of the previous homeowner.
Are There Caveats to Buying a House at Auction?
Here’s the catch. Often, when you buy a home at auction, you can’t get it inspected. You might not even be able to go inside the property before you buy the home.
That doesn’t mean what’s inside is scary—but it doesn’t mean it isn’t, either. If possible, familiarize yourself with the property before auction, perhaps by speaking with real estate agents or even neighbors. There’s no denying that buying a home at auction could be a gamble.
But sometimes risks pay off!
Sold, to the Home Buyer in the Back!
Is buying a house at auction the right choice for you?
That depends—but it’s certainly an avenue worth exploring, especially if you’ve been house hunting for a while. Use this information to guide you to making smart home-buying decisions. Good luck!
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