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Buying Distressed Properties:  Auctions

OVERVIEW: Eek! This offers the least amount of protection that you can have in the real estate industry. Consider it a Las Vegas type of event and do not gamble with money that you can’t afford to lose.  If, however, you have cash and are willing to go out on a limb to purchase at a POTENTIALLY good price, do your homework first!

PAY PARTICULAR ATTENTION:

• Do your homework BEFORE you make an offer. If you can inspect the house (frequently not an option), do so. If not, assume the worst on questions about the property's condition.
• The “special in-house financing” is usually littered with up front fees.  When you read the fine print, you'll see that these options are frequently more costly than traditional financing.
• You'll need money.  Closing cost assistance is frequently disallowed
• Again, you'll need money.  Most auction houses require you to pay at least 5% of the sales price to cover their auction services .
• You can get financing, but FHA is usually not allowed.  In cases where it IS allowed, it is usually not RECOMMENDED, since FHA will refuse to loan if the property's condition does not meet FHA standards.