How can I buy an Auction Property with Traditional Financing?

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How can I buy an Auction Property with Traditional Financing?

Ernesto Cisneros
New to Real Estate · Kansas City, MO · Member since 2017 · 8 posts · 1 vote

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) 

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Andrew Kerr
Rental Property Investor · Everywhere, USA · Member since 2012 · 689 posts · 525 votes
8y

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.

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  • Andrew Kerr
    Rental Property Investor · Everywhere, USA · Member since 2012 · 689 posts · 525 votes
    8y

    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.

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  • Account Closed
    Lexington Park, MD · Member since 2017 · 2 posts · 0 votes
    8y
    Originally posted by @Andrew Kerr:

    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.

    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?) 

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    8y
    Originally posted by @Account Closed:
    Originally posted by @Andrew Kerr:

    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.

    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?) 

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

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  • Ryan Parnow
    Investor · Cedar Rapids, IA · Member since 2014 · 77 posts · 21 votes
    8y
    I use a line of credit to buy houses on Auction.com. After the property closes, I refinance with my bank to a normal mortgage. It would be very difficult to get a regular mortgage for the purchase since you typically don’t get access to the interior of the house before closing. The appraiser would need to see inside and the bank is going to want an appraisal.
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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    8y

    @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".

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  • Alvin Barker
    Vinton, IA · Member since 2018 · 17 posts · 3 votes
    8y

    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

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  • Vic Iyer
    Fort Lauderdale, FL · Member since 2018 · 97 posts · 48 votes
    8y

    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.

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  • Ryan Parnow
    Investor · Cedar Rapids, IA · Member since 2014 · 77 posts · 21 votes
    8y

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

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