Hard Money eligibility for an auction purchase?

6 Replies

Greetings all,

I have a unique deal and I am exploring the possibility of using a hard money lender. Is there an HML that will loan a relatively small amount as low as 25-27% of the deal? I will be putting 130K cash into the deal and would need about 45K. The tricky part is, this is an online auction for a local home, so we have to have proof of funds after winning the auction. The house needs less than $10K in reno, mostly in AC repairs and pool pump. We would have it back on the market in less than a month, so I am okay with paying a 3-month interest minimum.

I realize it is -- or may be -- a unique scenario, but can anyone shed some light on anyone doing deals like this?

Thanks so much!


As a lender, I would like this loan if it was in my area, since it has a great loan to value. You can certainly reach out to some lenders before you bid and get a soft commitment from them. Most of us lenders do prefer that you have a property under contract before we spend to much time with you, but a short phone conversation is easy to have.

Thanks Jay and Derek! I think in my mind what makes it tough for any HML would be that it is an auction and not something we can get under contract. Auction.com lists the property as cash only, but also has mention that "in some cases hard money loans can be accepted" but doesn't go into any detail on if this property qualifies for that. I was hoping there may be a company that specializes in this type of niche funding.

You can just get a pre-approval from the HML and place the bid in. Give them your deal and they should have a turnaround time of 48 hours or so for the letter.

Going forward it would be great to have the letter in any case so you can pull the trigger when the deal comes your way. 

This is not out of the ordinary and can easily be accomplished once you have accepted offer. Make sure you have an agent run the right comp for you for ARV and the Days on Market in the local area - that will effect your holding cost and time.