Buying a house at an auction might be an exceptional opportunity for people, who seek for better housing deals and don’t mind unraveling the details of every single auction they might have to attend in order to get the house, as well as dealing with emotional and financial stress auction bidding and buying are related to.

While the reasons residential properties fall into the auction part of the housing market aren’t that bright, prospective homebuyers, who have enough knowledge, emotional strength and determination to work their way through the auctioning jungle, might be rewarded with significantly lower prices and the properties they would never be able to afford without auctions.

At the same time, being aware of numerous risks and difficulties of buying house at the auction, which include finding a decent house/apartment, going through the bidding process without overstepping the highest buy price, making sure that the paperwork is done correctly, managing the financial part of the deal without losing expertise and first payment and even winning the auction and getting entitled to the right to buy the house you’re aiming at, you should really consider all the pros and cons of buying at an auction before getting into it. As no matter how attractive the opportunity of getting a house cheap might sound, the auction is definitely not the brightest side of the housing market.

So, if you decide to test your luck and give finding your dream house on a budget through the auction, make sure to get as much info about the process as you possibly can. Investopedia.com has a great introduction into the auction buying all beginners should get acquainted with. And, these tips will draw your attention to some of the most important aspects of buying house at an auction and prepare you to its ups and downs.

Tips on how to buy action houses

1. Explore your options

The first thing you need to do is to contact your local auction houses and figure out which homes are on their lists at the moment. Make sure to get as many details about them as they can. Ask the representatives if you can visit the houses before you bid or if you can at least drive past them to see the neighborhood, the layout of the plot and the outside of the house.

Obviously, pay attention to the prices and don’t forget to add at least 20% to the sum the agents will give you. It’s an auction, and it starts low.

After that, conduct a pricing research to determine average price rates for the houses you’re interested in within the areas they’re located at. Maybe, the starting prices aren’t worth the whole auctioning hustle and it’s better to stick to ordinary housing market. Or maybe, the prices are so good that the house is actually worth fighting for despite its maintenance issues and inevitable renovation costs.

2. Acquire necessary consultations

Apart from taking to auction house representatives and agents about the prospects of the house you’re aiming at, it’s quite important to get professional support and advice before buying a house, especially at the auction.

You won't regret spending money on legal advice on home auctioning and purchasing from highly-qualified lawyer.

But, the first thing I’d recommend doing is talking to your accountant or financial consultant to determine whether you’re ready for such a big purchase or not. And, I can’t stress enough how important calculating the estimated final price of the house with the loan costs included and figuring out whether the bank you’re working with is ready to provide you with that loan is.

Most auctions are quite strict about the payment periods and conditions. If the buyer doesn’t fulfill them on time and fails to pay the whole price within the stated time frame, he’ll not only lose the right to get the house, but also the time and money he’s already spent on the paperwork and the first payment.

3. Know how to bid and don’t raise your expectations

Every auction is different. That’s why you need to work closely with your personal agent/lawyer/consultant in order to get through it successfully. However, there’re a few house bidding recommendations you might use to improve your auctioning positions.

Firstly, you need to be really careful while talking to the other parties involved (agents trying to sell the house, clients interested in it, etc.) not to give out too much.

Bid early, bid low and don’t tell anybody the highest price you’re ready to pay for the place. Like, never.  The lower you bid, the wider your further bidding possibilities are. And, what starts low might end lower than you expect too.

At the same time, you should never hope to buy the house for the starting price.

Remember that sometimes the owner might not agree to sell the house if the reserve price wasn’t reached. Or, the bank might not accept the winning price as the auction foreclosure. So, be ready to hear ‘No’ even if you win the auction.

And finally, never cross the line. Don’t let your excitement and the love for the house you’re fighting for to get you into a more significant financial commitment that you\’re able to afford.

4. Conduct a throughout inspection and be ready for remodels

Sometimes you may stumble across exceptionally great properties at the auctions. But, as financial struggles of previous owners push the properties out to the auctions, more often than not the conditions most of those properties end up in don’t make them the best places to purchase.

Most commonly, minor repairs are required for sure. And we’re talking about repairs, not remodels. The cases when the house needs major repairing and renovating investments are quite frequent as well.

While the location of the house and the price it’s being sold for might be good enough for you to agree on those conditions, it’s still necessary to inspect the home you’re bidding for o make sure that there’re no hidden problems that make the house not worth buying. So, make sure to find an experienced inspector for that job.

Hiring a general contractor to estimate the costs of possible remodels you’d like to carry out in the house you’re interested in might be quite beneficial for you too. As it might turn out that the total cost of the house, with all the purchasing and renovating expenses included, isn’t that different from the total price of houses on the ordinary market.

Sometimes it is higher than that, and sometimes the auction house appears to be a true diamond that requires a little bit of polishing.

5. Finish the deal and get ready to move

Once you receive the right to buy the house, let the professional lawyer you may rely on finish the deal and get the home auction foreclosure and properly ownership papers done.

Finally, when the place is practically and legally yours, set the moving date, book the movers (find the most reliable ones in your local area on HireRush.com) and get ready to start a new life at your new house.