Buying Farm at Auction

highlandview · #1 07/31/08, 08:52 AM

Does anyone have experience with buying a farm, house or property at auction? We may be giving this a try soon. Real estate prices in our area are still overinflated. We have had many possibilities fail - due to bad inspections, sellers not wanting to budge from asking price, etc. We sold our house in November, rented until May, put a house under contract that we found was full of black mold, cancelled the contract, had to move in with my parents and wasted several weeks trying to negotiate a price with a second seller who didn't really want to sell. My parents have been wonderful, but we have five kids and I feel very stressed being here. Getting another rental is hard without signing a long term lease because this is a college town. That being said many rental areas are party central. Our dream is to have a small farm where we can be more self sufficient. We are the only people in our families with this mindset. Although noone says anything I'm sure they wonder why we don't just buy one of the houses in one of the billion housing developments around here. What do we need to know before we go to a house auction? We are taking a relative with us who has experience with this. But, I would really like to hear from all of you.

agmantoo · #2 07/31/08, 11:14 AM

I think I have bought property through every manner it can be sold. You need to know that the property is deed clear/clean and that there are no outstanding liens or taxes against it. Get this in writing prior to the sale. You need to know if it is an absolute auction, if not, I would not attend. Ask if the bid has to stand for an upset. You need to have your deposit ready to write the check on and you need to know that you are likely not to get the deposit back for whatever reason. You need to know that the seller will expect you to close normally within 30 days. Make certain there is no buyers premium to the auctioneer or their company. Go to the sell early. Hear and understand what the auctioneer states prior to the auction. You will be bound by the terms aired. You did not ask this....if you elect to bid do not nickel and dime your way up on the bids. Determine what you would like to have in the property. Initially start the bid, not waiting on others, at 75% of that. This will possibly stop a bidding war before it starts. If that gets a higher bid from others jump back in with large increments quickly, this action will ward off everyone except the ones with deep pockets. Until you reach the price you want to pay, bid with enthusiasm, but watch the crowd to see that there is someone actually upping your bid and that you are not bidding against yourself. When you are within the maximum range you are willing to pay drop the enthusiasm and ponder your next bid prior to raising, make the auctioneer wait. If there is a shill in the crowd he will probably drop out if the amount is in the selling price range. Once you are at your maximum stop and go no higher. Do not get carried away with the excitement of the auction. You are there to buy the place worth the money, this is not a casino.

ksfarmer · #3 07/31/08, 11:52 AM

Agmantoo has a lot of good advice. I would add that if possible, attend another auction by the same auctioneer. Learn his method of crying a sale. One I know, will open by asking for a high bid, then in a few seconds (if no one bids at the high open) he will back down to a figure he thinks will get the bidding started. /Then when the bidding slows down to a stop, he will take a 10 minute break to let everyone think about it. Usually someone will make another bid after the break, not always tho.

wwubben · #4 07/31/08, 11:55 AM

I bought my place here in iowa at auction.I paid the small amount the day of auction that the owner had the auctioneer explain before the sale.I then had a lawyer take care of things for me.A small section of this farm had been aquired from a neighbor who ended up in a divorce.If i had not hired the lawyer i could of been responsible for the former neighbor's child support.BE CAREFUL.There are some real shady characters out there.

nathan104 · #5 07/31/08, 12:55 PM

Know and undertsand all the terms before the sale. Some auctions require payment in full the day of sale. Other require a cashiers check for 10% of sale price which is non refundable if sell does not go through within 30 days. Also, as stated, you need to do due dilligence in finding out for yourself if there are any past liens, claims or taxes on the property. Inspections need to be done before bidding. Know what you are buying.

highlandview · #6 07/31/08, 02:33 PM

This is all great advice. I'm going to check now if he has another auction coming up that we can go to. Many thanks!

fantasymaker · #7 07/31/08, 04:09 PM

Go to the property way before the sale talk to the neighbors till you understande the neighborhood.

Beaners · #8 07/31/08, 04:20 PM

You mention you have had trouble with bad inspections already, that should be a sign to you that you don't want to get in over your head without knowing everything about a house. If you even suspect there might be a problem, don't bid on the house. Even if you don't think there would be a problem, have a way to make sure.

You won't want to spend all of the money you have set aside on a house that will cost more to fix than you already spent.

Kayleigh

whitehouse · #9 07/31/08, 04:29 PM

See if you can get in and inspect the house before auction day. like a few days before. some auctioneer companys will have the key and will let you in some will not. also check to see if it is in a flood plain. that will effect the insurance premiums. where is the septic and well have they been inspected, check out your local health departrment for that information. assessors office in the county or parich will have information ion taxes size of property, fair market valu. when it was last bought and sold who did it and for how much. it will also tell you how big everything is when stuff was built. remember not all things are recorded. good luck

WeaverRose · #10 07/31/08, 11:11 PM

Plus check the utility companies (electricity, propane supplier, water co. if applicable) to find out what the deposit to transfer service to new owner; some companies will tell you what the last year's bills were (not who paid them, just what that house used in utilities) so you'll have an idea what it costs besides the house payment.
Be sure to have an inspection prior to the auction date, it protects you from getting stuck fixing some pretty expensive things that may not show up on the surface. As well as finding out who gets the mineral rights if you're anywhere within mining distance or even if you're not. And finally, find out if the county/district has covenants preventing livestock, if there's a new mega-hog facility being planned for the area (pee-yew!), or if the interstate is going to go through nearby. Nieghbors can be pretty helpful in some cases, but talk to more than one for the best picture of what it would be like there.