Need advice on buying an auction house in courthouse (short sale, loan)

[Raha]

I am interested in a property listed for auction at courthouse. The auction price is 500k. At the same time the house is listed as standard sale for 700k. I have pre approval for my loan and it's ready. Please answer the following questions:

answer my following question:
1. How much should I offer to win the bid?
2. Why this house is in the market as standard sale and is listed as auction for early October?
3. Do I need an agent to do the bidding for me?
4. How does auction in courthouse works? What documents should I prepare in advance?
5. Should I make an official offer when bidding?
6. How much the bidding cost?
7. Any hint or advise?
I appreciate your comments to my questions.

[spencgr]

It is my understanding that all gov't auctions are cash only. Did this one specifically say it will deal with a loan?

[weezycom]

The auction price of 500K is the floor. That's where bidding will start.

The bank(s) that holds the mortgage(s) will be there bidding and will not allow it to go to hammer for less than their current outstanding note(s) plus any carrying costs they've had on the place. They will bid it in for that price at a minimum.

You will need at least 20% of your bid price, if you win, in cash and certified funds that day to turn over to the auctioneer and be able to deliver the remainder of the funds in 10 days or so (details depend on specific auctions).

And, remember, you may still end up with title problems that have to be cleared up -- back property taxes will have to be paid, any contractor liens will have to be paid, plus recording fees and transfer taxes for putting the deed in your name and all that has to be done up front before you even get in the house and start to repair any damage that's occurred from the previous homeowner or vandals.

Buying a house at auction or short sale can be more expensive in the long run than just buying a house on the general sale market if you don't do your homework on the back story of the house.