Estate Home Sale Auction (disclosure, documents, auctions, mortgage)

[jaegermister]

All – I am preparing to go bid on an auction for a estate sale home. If anybody has had an experience in buying an estate sale home, please let me know your experiences and what to watch out.

thanks

[Nell Plotts]

I have no experience doing that but logic dictates examining the offering documents carefully (you will really want title insurance), make sure that it addresses leans on the property (tax, utility, workman). See if they will let you hire your own home inspector because there will doubtless be no building condition statement by the estate. If it is on a well take a water sample to your local health department.

[dontaskwhy]

Originally Posted by Nell Plotts

....make sure that it addresses leans on the property (tax, utility, workman). .....

The correct phrase is Liens, not Leans. You don't want to look silly requesting information with the wrong word.

[jackmichigan]

The most important thing is to carefully read and understand the terms and conditions of the auction. Most auctions that I have been to require that full due diligence be done before the auction, and that financing or cash be readily available to close. All of the auctions I have been to have stipulated that the houses were being sold "as-is".

With an auction, you should also set a maximum price ahead of time which you would be willing to pay. Don't get caught up in auction fever and bid more than your pre-determined amount.

You should also be aware of the title being conveyed, and whether there are any outstanding liens or taxes. If you have any questions regarding the transaction you should get professional assistance, preferably from a qualified real estate attorney.

[willow wind]

Auctions run pretty much the same whether it is an estate or anything else. Read the auction offering carefully.

You won't be able to have a home inspection, well test, etc. prior to sale. The auction offering will tell you the amount of time prior to sale that you will have to walk through the house. Often, it's an hour to couple of hours prior to the actual auction. If you can, bring someone with you who has contractor smarts about houses. The sale will be " as is".

Check to see what the auction offering price is. You will need 10% of that with you if you are the winning bid. Example, the house is offered at $ 200,000. You will need $ 20,000 in cash/bank checks to seal the deal. They don't take personal checks. What most people do is to bring cashier checks in $ 10,000 increments with them. If it's a real cheap house, then $ 5,000 increments.

You have 30 days after the auction to take possession. Not a day more. That means you need your financing pretty much in order prior to the auction. If you're going to pay cash for the house, no big deal.
If you're going to mortgage, this can be more difficult. The winning bidder will be required to provide proof of total funds needed prior to being fully declared winning bidder.

As already suggested, find out what you can about the property from town or county records, depending on where those records are kept. ( varies by state). Not only check liens, but check the file in the building department. If it's on city utilities , good. If not, find out if there is a septic system, when it was last pumped, if there is a cesspool ( ugh), if there is a dug or drilled well, etc. if the house has been condemned, etc. All due diligence will fall on you. Good luck

[Bill Keegan]

Originally Posted by jaegermister

All – I am preparing to go bid on an auction for a estate sale home. If anybody has had an experience in buying an estate sale home, please let me know your experiences and what to watch out.

thanks

I agree with much of what has already been advised. In addition, be aware that many auctions call for the buyer to pay an auctioneers fee ON TOP OF the agreed upon purchase price.

[Teddy52]

The wife and I did look at a house that was going to be auctioned off at an estate sale.

This situation was quite unique.

You had to call a realtor to make an appointment for showing and the realtor said this auctioneer rarely deals in real estate so that one realtor had an agreement that whenever real estate was part of an estate auction, the realtor would handle the details .

I liked that set up !

[Str8Arrow]

I've bought quite a few homes at auction. There is a lot to know and at the same time it is all fairly straight forward.

DO take a long time looking over the house. I mean don't just walk into each room, nod your head and walk out. Take in every little detail. Take in the ceilings, take in the seams, the walls, settling cracks. Pound on walls and listen. How "neat" is everything? If people keep up with the small repairs, usually they're on top of the can't-see big ones, usually.

Signs of termites, mold, infestations, etc. How tight are the windows, drafty? Double glassed?

Make sure everything works! Check every electrical/water outlet, every switch, every appliance, etc.

The list is endless but the most important question to ask is just why is the home being sold at auction?

The people moving? To settle an estate? Dire money troubles? Unique property? Just because?

Be very leery of the "just because" ones. Trust me there is a reason if listing it or FSBO wasn't their first option. Don't let AS-IS be your worst nightmare.

When you tour the house, ask for their disclosure. Some have, some don't. If not, proceed with caution.

Remember a just pumped septic can hide a bad septic.

Cracks in foundations, bulges in basement walls, signs of water leakage, etc.

Did they save the instructions to major appliances, especially to the furnace? Did they label their electrical box? Did they keep records of any upkeep? Like I said, look for the the little peculiars.

[bigtexan99]

How did the auction turn out? Did it sell for below market value??