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Firsttimehom…, Home Buyer in Marietta, GA

First time home buyers want to buy at auction

Asked by Firsttimehomebuyers, Marietta, GA Thu Oct 21, 2010

My husband and I are first time home buyers and we fell in love with a house that was a foreclosure. After putting in an offer, the bank responded that the property was being sent to auction, and we would need to resubmit our bid to the auction house if we were still interested in buying it. We still love the house and want it, but the auction process seems very scary, especially for first-time home buyers. We would be using an FHA loan and we don't have tons of cash. Is this a viable option for us, or should we (with a broken heart) keep looking for another house?

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It is an option but not one I'd recommend for a novice for many of the reasons already stated as well as 1) it can cost you more out of pocket than buying a home almost any other way; and 2) the auction firm dictates the entire purchasing process tying the hands of your realtor. You need a Realtor you can trust that has protecting your interest and producing your dreams as their goal.
0 votes Thank Flag Link Thu Nov 18, 2010
Good answers so far, but I wanted to add a couple of things. You must remember that most auctions require the buyer to pay an additionaly 5% of the sales price. This is the commission only for the company putting the auction together. An Auction is ususally just a big warehouse of listings that are attempting to gain an acceptable offer to the several different sellers. As an agent, I have had accepted offers for REO properties, that cancelled and went to auction. The properties did not sell for what the lender (owner-REO) wanted and was later relisted. Unfortunately both buyers changed their mind, as this created a trust issue.
On my 2nd point, I really think that you should get qualified for a conventional loan if you are going to buy at the auction, as the FHA certification may be out of reach. If a home inspection is possible, I highly suggest spending the $250 to $400.
Have an agent totally follow the property and be ready, as the auction is not a sure thing and below 50% even go to escrow.
Web Reference: http://www.sopactitle.com
0 votes Thank Flag Link Wed Nov 17, 2010
Not sure why you cannot have an inspection performed on an auction home. Is there no option offered to perform your due dilgence? Are you to bid on it sight unseen? Just because it's "As-Is" does not mean you should not find out what the ACTUAL CONDITION of the property is. You can visit the same property more than once, however, it cannot replace hiring a qualified home inspector to inspect provide a proper inspection. It's one of the biggest investments most people make. Just my 2 cents.
0 votes Thank Flag Link Wed Nov 17, 2010
you can make a bid at auction but understand that the process is very complicated, moves quickly and you will be at a great disadvantage - you can win and then be told later that the contract was cancelled - most of them reserve the right to do that. I guess what I am saying is, if it didn't sell on market it probably isn't worth going after at auction - I would move on - way too much out there to get bogged down, but that's just my opinion.
0 votes Thank Flag Link Fri Oct 22, 2010
Definitely you should have representation. You need the assistance of realtor. Depending on the property, you can sometimes place a pre-auction bid before the actual auction takes place. Contact an agent, (hopefully through Trulia). She can find out where and when the auction will take place, and assist you and your husband with placing a bid. Feel free to contact me if you need assistance.

Best of luck to you!
Web Reference: http://www.DesariJabbar.com
0 votes Thank Flag Link Thu Oct 21, 2010
If the property is not in good condition it may not be approved for an FHA loan. Buying a home at auction is scary. I don't believe that it is not the place for a novice. You cannot do inspections. It is being sold "as is", which means anything could happen to it between the time that you purchase and the time that you close and you get what you get. I would consult an attorney about the cons of purchasing at the county steps.
0 votes Thank Flag Link Thu Oct 21, 2010
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