Advice for buying at Auction?

6 Replies

I recently found a house being sold at auction. It's not a foreclosure and apparently the sellers have an option to not accept the winning auction price. This might be a great opportunity for me but I have only begun researching this process this past weekend so advice here would be great.

The house was built in the 50s and current owners have lived there since the mid 90s. The website lists information about the house and references no liens. I saw the property at an open house and appeared well kept, though I'm a total novice at real estate/construction, and my best guess is the home owners are in their 60s or 70s. It's 3 bed, 1 bath and 1,360 square feet in a quite neighborhood, moderate cost of living, and a house down the street with 50 more square feet sold for $163k in May of this year.

The auction requires $10k cashiers check, which I have, and if I’m the winning bidder, I owe the full amount in 45 days or I lose the $10k. 


My questions

This house is being sold AS IS. If I'm the winning bidder, can I have it inspected in that 45 day window and, if any catastrophic problems are found, simply forefit my $10k? This would be a bad situation for me to lose that kind of money, however I'm wondering if that's a way that I can have sort of an Insurance policy on this auction bidding. I don't know how much work would be required for this inspection but the parts I've seen only need some cosmetic updates. With the local comp of $163, I'm hoping this house can be had for less than $50k, and that would allow me about $50k more to sink into the home post inspection plus cosmetic and still have a realistic chance to make my money back or turn a small profit. While this isn't entirely a flip, this is a chance for me to pay cash, live without a mortgage or a very small mortgage, save money, and in 3-5 years I'd sell this house and buy something in the $350k range.

I might be living in a fantasy world with the possible $50k or less auction price, maybe this house will go for double that. But what is some advice people can offer for buying a house at auction with all or mostly cash, especially for a beginner like me. This house isn't a foreclosure, it's just being sold by an auction company. If you need more details, just ask. I hope the experts here are able to offer me help and direction and I thank you.

Al  

We don’t know the auction terms and whether you would be allowed access to do an inspection or not.

But realistically, if the house is in decent shape and is worth $150k ish.....there is no way in hell you will get it for $50k, even $100k, even if the owner didn’t have to approve the price.

No type of auction will get you that kind of discount.

Originally posted by @Wayne Brooks :

We don’t know the auction terms and whether you would be allowed access to do an inspection or not.

But realistically, if the house is in decent shape and is worth $150k ish.....there is no way in hell you will get it for $50k, even $100k, even if the owner didn’t have to approve the price.

No type of auction will get you that kind of discount.

 Thank you for your reply.  

If the house is purchased, as-is, at auction, could the new owner be liable for issues and problems more than just what’s wrong with the house?  This particular auction allows people to walk through the home so I plan to hire an inspector to come with me on one of the way walks.  Though, an inspector can’t see everything.  What are some catastrophic, money-pit, type problems a home might have when purchased at auction after  proper inspection during a walk through?   I thank you again for your reply and information  

Hard to say without knowing the terms.  Most of the auction ones I have looked at are sold as is.  Meaning no inspection you get what you get.  If things go wrong you fix not the seller.  It's the risk you take buying an auction property.  It could be a home run or a money pit that needs major repair.  Pictures don't always show the true story.  If I had bought my first property just based on pictures I would have easily been out 40k in repairs.