1. Good quality homes being auctioned off because there are currently no buyers for them (typically excess standing inventory for a builder).
Weâ€™re not seeing any of these types of auctions currently in the Bay Area â€“ these were prevalent back in 2007-2008 as builders went bankrupt or needed to get inventory liquidated. These homes would have qualified for VA loans BUT they are all gone.
2. Homes being sold by auction companies because theyâ€™ve not sold on the MLS.
Typically, these homes are being auctioned because they are very poor condition. These are being sold â€œAS-ISâ€ with no seller contributions of any kind. Homes such as this do not qualify for VA loans.
3. Homes being auctioned on the courthouse steps.
CASH only â€“ VA cannot be used for these homes.
Bottom line: in the current market here in the Bay Area, the answer is NO.
I hope that helps,
George Nowicki REALTORÂ®
Realty World Platinum
3333 Bowers Ave #130
Santa Clara. CA 95054
A Los Gatos home that was previously listed for 1 million (short sale) was put up for auction yesterday and was sold for 1.1million. So, there are homes that sell at our auction every week. Some do go back to the bank, however a larger number are seeing "sold on the steps" for more than the offers they received as short sales.
VA financing is restrictive in that the title must be clear, (due to financing and is not the case when buying an auction home), the property condition must be free of necessary repair and any HOA attached to the ownership, must be in good order. If you are considering Condos or any property within an HOA be sure the community is VA approved FIRST. There are few that are, however your Realtor should be knowledgeable in the process of how to gain a VA approval. VA Approvals take a minimum of 60 days. 30 for reviewing agent and 30 for Legal review within the regional office. Our VA regional office is based in Phoenix.
You have to applaud the VA for using great care when financing our veterans. The protections that are built in lighten the burden and insure a sound investment is being made.
God Bless our Troops!
VA financing requires inspection, possibly repairs, appraisal, a Title report and time to review all of these. Auctions require cash at the close of the day. There are "hard money lenders" who charge high fees and rates for short term loans that assist people at auctions, but they do require significant cash down.
Auctions are not for the casual buyer. Most homes put up for bid do not receive any bids at the asking price and then revert to the bank. There are no disclosure obligations from the bank and few if any opportunities to preview the homes let alone conduct an inspection. Buying a house at an auction is speculation, which can have big rewards, but for most people the risks are too high. Unless you have cash reserves to address repairs, back taxes, second, third and other liens, I don't recommend this route.