How can I buy an Auction Property with Traditional Financing?

Question

Hello BP nation! I am a total newbie looking to buy my first property. I am seeing what might be really good deals on Auction.com, but if I was to place a winning bid, how do I pay for the property?

Unfortunately I do not have enough cash to buy the property, is there a way to pay for these with traditional mortgages? Could I do a 203K loan on one of these properties? I would like to stay away from hard money for my first deal. (mostly because I am afraid  of the rates)

Andrew Kerr · Answer

Hi @Ernesto Cisneros - generally not as most auction sales want $5-10k cash to hold your bid. Then you generally need cash close very quickly.

Ryan Parnow · Answer

@Alvin Barker Yes, Ive purchased 3 properties on Auction.com.  It worked out great on 2 and so-so on the 3rd.

Vic Iyer · Answer

What they are telling you is that financial contingency is okay if you are buying it for yourself (probably need to sign owner occupant certification). This means appraisal contingency should also be impleied. You need to initiate a chat with auction.com and save the response for future use if needed. Also check if they allow inspection contingency on this particular auction. Each bank is different so check it out. Last but not the least do your own title check if you plan on using auction.com title company that gives free title insurance.

Ask about your EMD . What happens to it if you cannot get loan approved or if the appriasal comes back low.

Alvin Barker · Answer

I'm looking at one of these also and on this one there is a

A Finance Contingency is being offered only to buyers      intending to  occupy the Property, on properties with Financing Available.

does that mean the bank that owns it is interested in loaning you the money or make the offer subject to?

was just getting ready to ask advice on this subject but think it falls close enough to this thread.

@Ryan Parnow and @Ernesto Cisneros did you guys buy off this on-line auction.com ? if so how did it work out?

any others with experience with this?

I'm looking to house hack at least one of the properties I plan to buy this year.

thanks

Alvin

Chris Mason · Answer

No rule against this, and that's the way to do it.

Account Closed · Answer

Okay, makes sense. Thank you for your response!

Would it be possible to get hard money to purchase the property with, then get it into livable shape to qualify for a normal mortgage?

Is there rules against getting a mortgage for a property you already own (with the hard money lender?)

Stephanie P. · Answer

@Ernesto Cisneros

Don't be afraid of the rates if the deal works.  It's all math.

Even with hard money, though, you need to have some "skin in the game".

How can I buy an Auction Property with Traditional Financing?

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