Buying property at auction?

Discussion in 'Homesteading Questions' started by hisenthlay, Jul 2, 2006.

  1. hisenthlay

    hisenthlay a.k.a. hyzenthlay

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    Has anyone here ever bought land at auction? Do you have any tips? I'm thinking of things like what inspections to get when, how to get financing (since it's not a traditional mortgage), additional costs that may be involved, etc....

    We came across a property when we were out driving around today, about 15 acres, very private, great location for us, with one liveable house in need of lots of repairs, one old cinderblock house that looks like it might make a decent garage (with a lot of work), about 5 acres cleared and flat, the rest wooded and hilly, no visible water on the property (streams, etc.), house is on well and septic, decent gravel driveway, no fences anywhere, owned by one guy for the last 76 years....

    So, this is a longshot for us, because we really have no idea how much it will go for (depends on whether the developers show up to buy, or if it's just neighborhood folk), and we weren't planning on buying until next year, but we were so charmed by this place that we're considering it. But we don't know anything about buying a house at auction, so that part worries us a bit.

    Any words of wisdom on buying at auction? :shrug:
     
  2. Shadow

    Shadow Well-Known Member

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    You will have to have financing aranged ahead of time. You will be requited to post partial payment the day of the sale and the rest paid to the auction company usually 30 to 90 days. If you do not pay the balance you will lose the deposit you pay at the sale. Watch out for fees and have every thing checked by your attorney. There are risks and you have to watch out. We have bought several pieces of property at auction and no problems. But we have years of experence. The last one the seller changed his mind and really did not want to sell but we advised him we had made the arrangements and would be out a considerable amount and we would be compensated and he finally finished the deal. Watch your self and be careful.
     

  3. boonieman

    boonieman Well-Known Member

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    Another thing to watch for is read the fine print and see if there is a "buyers premium". For example, if it says a 10% buyers premium, that means you have to pay 10% above the final bid of the property. More and more actioneers are going that way.
     
  4. palani

    palani Well-Known Member

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    Watch out for schills and set a max bid before the auction. Don't be afraid to ask the auctioneer where the bid is.
     
  5. hisenthlay

    hisenthlay a.k.a. hyzenthlay

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    Thanks for all the good advice, guys. I really appreciate it. Since reading your answers the other day, I have started trying to obtain preapproval (my finances aren't a problem, but the first couple of places I called wouldn't finance anything over 10 acres), and I checked with the auctioneer to see if there were any buyer's premiums or other fees (there aren't). I know in my mind what I'm willing to spend for this land, and I won't go over that. I asked the auctioneer what the bid would start at, and what the seller's reserve price was, and he wasn't informative. He said that he would start the bid at $5000 (clearly way low), and that the seller had no reserve, but the sale price was subject to his approval. So no help there. I figure I'll just show up and check out the competition on auction day.

    Since you've done this before (Shadow and others), what inspections (if any) did you get before you bid?

    Thanks!
     
  6. trixiwick

    trixiwick bunny slave

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    You must make absolutely certain that a title search is done to ensure that the guy who appears to be the owner is truly the only person with any legal claim on the place. A real estate agent (working for you, not the owner) or an attorney can do that for you.

    I'll keep my fingers crossed for you!
     
  7. hisenthlay

    hisenthlay a.k.a. hyzenthlay

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    Thanks, trixiwick. :) The property is sold "as is, where is" EXCEPT that the sale is contingent on the passing of good title under the contract. I think that I'll receive a copy of the contract to look over later today. So it's my understanding that in this case the title search can be done after the sale. I feel a bit uncomfortable about that, but seeing the contract may make me feel better. Anyone know if this arrangement is normal?
     
  8. Shadow

    Shadow Well-Known Member

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    AFter you bid its too late to change your mind or have inspections done. When the auctioner says sold its sold.. We have bought some and did really well. Remember bought one and seemed to be a good older house we thought we would need about 10,000 to put it in top shape. went to replace a bad spot in the sheetrock and the wall collapised. Bought it for 22,000 spent 25,000 but came out sold for 55,000 was it a good no but at least we didn't lose money just our time.
    Don't really think its for beginners, we bought and sold houses for several years. quit in 1999 guess we were flipping houses before we ever heard the term. Held most for rental units sold out in 99 should have just sold as we went rentals are not a good thing. If you can do the inspections and rely on your expertize you should be ok.
    No auctioner will give you the sellers min price or what the reserve is thats standard policy. But remember watch for the buyers premim and if you are the high bidder its your and they will require 10 to 25 percent down the day of the sale. Balance is usually 30 to 90 days. If you don't come up with it you will be out your down and possibly have to pay the cost of the sale. Be careful. I would advise going to several and keeping your hands in your pockets and not bidding before you learn enough to start bidding.
     
  9. Alice In TX/MO

    Alice In TX/MO More dharma, less drama. Supporter

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    You probably already know to watch for the developers. They will be the folks bidding steady without having to hesitate and think.

    Title searches were done after initial paperwork on every piece of property I ever bought. If it's not clean, you should get your money back.

    Looking forward to hearing how this turns out for you. :)
     
  10. citilivin

    citilivin Well-Known Member

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    The most important is clear title. Make sure there are no liens, including taxes!
     
  11. CatsPaw

    CatsPaw Who...me?

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    Here's the best peice of advice you'll get on this thread. Unless you're made of money, I guarantee in the time you have before the auction you won't have the time to find out what you need to know about the property to buy it safely.

    I'd say forget it.

    I had a lawyer do a title search and he found stuff the title search company paid for their services didn't find when I bought my place. I didn't even know I had a cave/sinkhole on my property until a neighbor told me about it. I had owned the property for several years. Neighbors are a great source of info.

    Rule number 1 for auction buying....:

    if it's not a bargain...don't buy it.

    Rule number 2....

    there will always be another "great deal" on something you want somewhere down the line when you have the money and/or the time to do it properly.

    Unless you know this property, and have taken the time to investigate all it's quirks....DON'T DO IT!

    Rule number 3....

    take everything with a grain of salt.....

    Someone was trying to buy a peice of property that needed some repairs. Typically a bank/mortgage company wants an estimate for any repairs and stuff so that everyone knows everything up front. I went to the property to do those estimates on the property. I was there probably about 30 to 45 minutes, saw what I needed to see, and left. Sent my report in, etc. etc. The deal fell thru. My brother said I should buy the property. So, I did. Didn't even see the place again 'til after I owned it. Been there ever since and will never leave.

    takes yer choice!