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just curious, we were entertaining a house that may be up for auction next month-our question is"what happens if a house does not sell at auction?" does this ever happens? apparently the owners are trying to stall the auction, we have been a bit scared to place an offer on it..can it still go to auction even if we placed an offer?
thanks for your help with this.
The details of what happens at auction differ from state to state but IN GENERAL a home that gets no bids at auction transfers to ownership of the lender and the lender will market it as REO.
If you have the CASH to go to the auction you can get a HUGE bargain, but financing is NOT an option.
Yes, if the property doesn't get sold during the auction, the bank will take it and tries to re-sell it later (it's called REO). IMO it's safer to buy REO because the title is clean and you have more time to do the inspection. Good luck.
The title is just as clean at auction, assuming there is no fraud involved that already got by the foreclosing first mortgage holder. If fraud were involved you not be able to buy REO as the foreclosing lender would not be able to foreclose. A bit circular, but that is how it goes...
It is true that you would not typically get any inspection at auction, but REO is generally sold "as is" so if your inspection does find something that you don't wanna take care of out of your pocket the deal is DEAD anyway and you are the cost of the inspection...
Still I have to agree that if you are only finding these things out for a property that you are trying to buy as a short sale this is probably not for you. There are huge risks in acquiring ANY property and if you have never bought a distressed place before you could learn some really expensive lessons...
WOW, there is so much misinformation in this thread. As an auctioneer, may I try to even things out?
1st. Everyone needs to know that all real estate being auctioned is not in distress or foreclosure. As I understand the OP, this home is being sold by auction as a choice.
2nd: You can borrow money to buy a home at auction. Your lender just has to be committed to close the loan prior to the auction. The lender may set a maximum loan, but be otherwise firmly committed to the loan. Don't bid planning to mortgage the property without understanding you may loose the deposit you make at the auction.
3rd: Every auction has terms and conditions unique to that property. Call the auctioneer, the master commissioner, or the public official responsible to get the specific details of what you need to know prior to bidding.
4th: Find an Realtor who is also an auctioneer in the state where the property is located. Pay the Realtor/Auctioneer a 1, 2, 3, or a fixed amount to represent you at the auction. You may not even need to attend the auction. Odds are, such representation will provide tremendous financial benefit for a few dollars invested.
5th: If the property doesn't sell at auction, if a private seller, the seller is free to re-market the property through whatever means they wish. It's still their property.
As a note of caution, most states automatically assume that unless specifically stated to be otherwise, an auction is "with reserve". If advertised "without reserve" or "absolute," then the title must transfer to another legal entity or person. Example, a husband and wife, or legal partners are "divorcing" or "splitting." Either or both parties can bid against the other, but if the winning bidder, the title must change.
If you need more information about auctions, I recommend two groups. The National Association of Auctioneers, NAA | Homepage, or the National Association of Realtors, www.realtors.org each have websites with good information about buying homes at auction.
If the auction is a voluntary choice of the seller of the house that is VERY DIFFERENT than a court ordered auction for foreclosure. In the case of the OP they CLEARLY state the 'owners are trying to stall the auction' -- that strongly suggests this is NOT a voluntary decision but instead a COURT ORDERED action on behalf of the lender to satisfy the foreclosure.
Anecdotal: In my neighborhood, when a home fails to sell at auction (and many of them do), it shows up a few months later as an REO-- at a price significantly lower than the auction reserve.
thank you for your responses..the house is being foreclosed and forced to auction. The owners are trying to get an offer before the auction date which is getting close . The house is immaculate , the owners live in the same neigborhood, they bought a bigger house , but have been unable to see this house. We will see if we decide to place an offer. Thanks for all your help.
Ok - that makes it much more clear.
Yes, this would be a great time to make an offer. If you don't have one, get a good buyer's agent. Ask the agent to find out the amount due against the home = the amount of the pending foreclosure. That should give you an idea of what the seller needs to get to stop the foreclosure. If you can get an offer in quickly it's likely the lender will stay the foreclosure to allow you to complete the sale.
You could do very well on this property. But you will need to move VERY fast!
Best wishes.
Ok - that makes it much more clear.
Yes, this would be a great time to make an offer. If you don't have one, get a good buyer's agent. Ask the agent to find out the amount due against the home = the amount of the pending foreclosure. That should give you an idea of what the seller needs to get to stop the foreclosure. If you can get an offer in quickly it's likely the lender will stay the foreclosure to allow you to complete the sale.
You could do very well on this property. But you will need to move VERY fast!
Best wishes.
A question-------how rare is it today that a house at a foreclosure auction sells for more than the amount owed on it ?
I ask this because the poster I quoted stated one should find out how much is owed and make an offer so the owner can stop the auction.
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