If you are thinking of buying a house at auction, you need to know what you are getting yourself into. People want quick sales, but there may be reasons behind it other than the obvious. You need to investigate the house thoroughly but you only have a short space of time in which to do it. To make the most of this situation, you need to follow a set procedure:
Set up your financing Know from your bank how much you can borrow at short notice and work out your budget the same way you would for buying on a regular sale. The house is only worth a set price which should consist of:
- The asking price
- The cost of refurbishment
- The potential asking price
Inspecting the property
We have already told you in another chapter what to look for when you are buying a property but bear in mind that when you are buying at auction, you have a limited time to get all your estimates together. If you can take your contractor with you, you may have to pay them a little to give you the time but it will be worth it because they will know what to look out for and will be able to give you an idea on remedial costings.
Decide on a set budget
This is vital because it is very easy to get carried away with bidding. If the home reaches the amount that you have decided is viable and there are still bids coming, walk away. You won’t make money on the house and it’s one of the biggest mistakes that real estate flippers make. They hear others bidding and they up their bidding beyond what is reasonable.
If you are the winner of the auction, you will be expected to pay for the property up front. It will be worthwhile finding out what fees are involved when you purchase the house and just before the auction, you can find this out from asking the staff at the auction house. This kind of purchase is suitable for those who are cash buyers because they know their exact financial situation and also know how much money they have left to do the repairs.