Auction Homes a Bargain – and Maybe Money Pit
Would you buy a home priced 30% below comps if the repair costs could be anywhere between $1 and $100K? Auction homes are high risk/high reward.
NEW YORK – Homes purchased via auction can be less expensive than comparable homes, but that bargain comes with inherent risks.
Auction listings are more likely to be in a state of disrepair, though they usually cost less and close quickly.
The risks are part of the process: There’s little or no time for inspections and often an inability to physically check the property. Buyers must pay with cash, and take on the paperwork burden.
Auctions can take place physically and online, with sites like Auction.com offering notifications of suitable future auctions. Local government offices will also have information on where foreclosures and other types of sales are reported, and those should offer the most accurate data.
Real estate websites and the multiple listing service can also be auction sources, and those in the market for auction homes should do diligent research. Aspiring buyers must register before bidding and ensure their understanding of the rules, The should also set a maximum amount they’ve decided the home is worth and stick to it.
Successful bidders will usually be assessed a minimum fee, be expected to pay a deposit immediately and pay the full amount within a specified timeframe.
Source: RISMedia (05/05/23) Gassett, Bill
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