There are many pros and cons to buying a home at a real estate auction. Real estate auctions allow people to bid on and buy property at a publicly held sale. Sometimes sellers choose to sell their properties through a real estate auction. Often homes for sale at auction are homes that went into foreclosure. There are both advantages and disadvantages to buying a home through a real estate auction.
The Pros of Public Sales: Buying a Home at a Real Estate Auction
One of the pros of buying a home at auction is the price. Homes sold at a public auction offer deep discounts when compared to homes sold through more traditional channels. Some auctions have no set reserve price, so the homes will sell to the highest bidder no matter how much they bid. Foreclosure auctions often offer buyers enough time to have an inspection done, to learn more about the property and any potential problems. Real estate auctions can make buying a home easy -- there are no negotiations- either a bid is accepted or it is denied. Buyers also often have the opportunity to see what others are bidding at a real estate auction. Closing typically happens quickly, within 30 days of the end of auction.
The Cons of Real Estate Auctions Include Uncertainty
There are a number of cons to buying a home through a real estate auction. In some cases there isn't time for an inspection, and the property may have serious problems not visible to the naked eye. Homes are bought "as is" with no warranty and no recourse if problems are found. Tax liens on properties at foreclosure auctions may become the responsibility of the new homeowners. If the home has been vacant since foreclosure, vandalism or weather-related damages may have occurred. Some earnest money or payment in full is required to buy a home at a real estate auction, but getting pre-approved for a home loan can negate this con.
Comparing prices for homes in the area and doing an inspection before buying any property can prevent a lot of uncertainty when buying a home at a real estate or foreclosure auction.
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Lisa Nichols is a freelance writer, website content strategist and marketing and PR strategy consultant. Originally from Eugene, Oregon, Lisa is currently based in Covington, Kentucky (also known as greater Cincinnati, Ohio).