BusinessHABBuy Restaurants/Bars @ auction: Restaurants / Bars: Whether you’re investing in property or buying a home for yourself, purchasing a house at auction may help you get a good deal.
Homes sold at auction are commonly foreclosures, but tax lien holders and estate sales also auction homes.
You can find homes for auction in your local newspaper, online, or through a real estate agent.
Then, you’ll need to find a home that interests you and attend an auction.
If you’re the winning bidder at an auction, you’ll need to complete the sale within a short window.
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Buy Restaurants/Bars @ auction
1. Check your local newspaper for notices about local foreclosures.
Banks are required to publish information about foreclosures in the local newspaper.
This will include details about the property, when and where the property will be auctioned.
And how much money the winning bidder will need to pay on the day of the auction.
- However, these listings won’t tell you the square footage or other interior details of the home.
- You can search the address of the home to find out more information, but this is not always available.
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2. Search websites that compile auction listings for foreclosures or tax liens.
Scrolling through an auction website can be the most convenient way to learn about upcoming auctions.
In addition to local websites, you can check national websites.
That have auction information from around the country, including where you live.
3. Contact a real estate agent who handles real estate owned (REO) properties.
Homes that are going to auction are called REO properties.
And some real estate agents specialize in helping buyers purchase these properties.
They can provide you with a list of available properties in your area.
And may be able to take you on a walk-through of the property.
They’ll also walk you through the auction process and paperwork involved in buying a home at auction.
- Your real estate agent will add their fee to the cost of purchasing your property if you buy a home.
- A real estate agent can also help you find upcoming estate auctions.
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4. Watch for an auction listing that interests you.
Check the listings often, as new properties will come up for auction.
Read each listing to find a property that might work for you.
Then, you’ll want to research that property before entering a bid.
- Take your time when looking for a property.
- Homes sold at auction will be as-is, so you’ll be responsible for fixing any damage to the property.
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5. Analyze the property listing to determine the state of the property.
Some homes up for auction are in good shape, but others are rundown.
The property listing may offer details about the property’s current shape.
It may tell you if the property was well cared for or is a recent build.
Similarly, it may warn of issues by stating that the property needs maintenance, suffered flooding, or is vacant.
- If you’re working with a real estate agent or lawyer, ask them to help you review the listing to look for wording that might indicate an issue with the home.
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6. Look for the home on internet listings, such as a prior MLS post.
Search the address online to look for current or old multiple listing service (MLS) postings.
Which may contain photos and details of the home.
It’s common for homes to remain on realty sites even after they’ve sold.
Additionally, search public land records online for information about the most recent selling price, appraised value, and tax debt.
- If you can’t search public land records online, you can talk to your county clerk’s office to find out who can help you in your area. Some locales have laws restricting access to this information.
Buy Restaurants/Bars @ auction
7. Scout the property to the best of your abilities.
Since the lender doesn’t own the home.
You likely won’t get to see inside it unless you’re working with a real estate agent who has access.
To inspect the home, drive by it and take pictures of the exterior.
- Do not go inside the property unless the current owner invites you in, which is unlikely to happen.
- If you attempt to enter the property without permission, you will likely be arrested.
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8. Visit the open house if one is offered by the auction house.
Some auction houses will host an open house to allow potential buyers a chance to see the property.
However, this doesn’t happen very often.
If there is an open house, attend it so you can walk the property and ask questions.
- An open house is more likely to happen if the home being auctioned is part of a larger estate.
- In most cases, you won’t get to go inside a property that’s up for auction.
Buy Restaurants/Bars @ auction
9. Do a full title search on the property you want to purchase.
The title search will find any outstanding debts related to the home.
Such as unpaid taxes or property liens.
Additionally, the home may have a second mortgage against it.
The new owner will be responsible for clearing these debts.
So it’s important to consider them when determining your highest bid.
- Some reputable auctioneers will provide this information prior to the auction.
- However, a real estate attorney can complete a title search for you to make sure all of the information is accurate.
- This can save you money in the long run, as it helps you avoid purchasing a property with debt attached to it.
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10. Check if the auction will allow financed bidders or cash only.
Depending on the auction rules.
You may need to pay for the home in cash on the day of the purchase or soon after.
However, this isn’t always the case.
You may be able to finance your purchase with a pre-approved mortgage.
The auction listing will explain the rules for the home you’re interested in buying.
- If you don’t have enough cash to buy a home that doesn’t allow financing.
- You may be able to get a personal loan to help cover the difference.
- However, you’ll need to get the loan before you bid on the home.
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Buy Restaurants/Bars @ auction
11. Every auction house has its own auction instructions.
Some house auctions allow you to bid over the phone or in person on the day of the big.
While others require you to bid in person.
Often, the house will specify that a specific percentage down is needed in either cash.
Or cashier’s check the day of the auction.
The rest of the money can either be cash or a loan, but it needs to be paid fairly quickly.
12. Check the rates of mortgage lenders in your area.
You can check rates online or visit your local banks and credit unions to discuss rates in person.
You may receive a better rate if you go through a bank or credit union where you have an account.
Choose the rate that’s lowest or offers the best terms.
- Review the terms and conditions to make sure they are favorable to you.
- In some cases, lower rates may carry stricter terms and conditions or may come with higher origination fees.
- Origination fees are charged when your loan is issued. Count this amount in the cost of your loan.
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13. Get prequalified for a mortgage if you can’t pay cash.
If your auction allows financed bidders to purchase property, apply for your mortgage ahead of attending the auction.
This allows you to prove that you can complete the purchase if you’re the winning bidder.
Bring your prequalification letter with you to the auction to provide as evidence that you have the funds.
- Some auction houses have preferred lenders that they encourage buyers to work with.
- You can check the listing for this information or call the auction house on the listing for more information.
Buy Restaurants/Bars @ auction
14. Set a budget for your maximum bid based on the market.
It’s important to go into the auction knowing how much you can pay.
Especially if payment is expected on the day of purchase.
Ask your real estate agent for recent sales listings for comparable properties in the area.
As another option, do an internet search to find how much comparable homes are selling for in your area.
Then, determine how much money you can actually pay.
- Determine the maximum you can afford.
- By adding together the cash you have plus the amount of your pre-approved mortgage.
- Your budget can’t be higher than this amount.
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15. Subtract potential repair costs from your budget, if necessary.
If the property might need repairs, include potential repair costs in your budget.
Talk to a contractor or search online.
To find repair estimates for the type of work you expect to do on the property.
Subtract these potential costs from your max bid.
So that you don’t accidentally pay more than you can afford.
- For example, you might see from pictures of the property that all of the cabinets need to be replaced.
- You could look up the estimated cost of replacing kitchen cabinets and subtract that from your budget.
Buy Restaurants/Bars @ auction
16. Bring your advanced deposit in a cashier’s check, money order, or cash.
The advanced deposit is always provided in the auction listing.
It’s commonly 5-10% of the expected purchase price of the home.
You must provide the advanced deposit to the auction house before you can participate in the auction.
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17. Arrive to the auction an hour early so you won’t miss the sale.
Most auctions are held at the local courthouse.
But the auction company may decide to host the auction at another location.
Such as a hotel conference room.
This location will be included in the listing.
Most real estate auctions last only a few minutes, so it’s important to get there early.
- It’s normal for real estate auctions to get canceled, as the owner might pay their debt.
18. Register and get your bidding paddle.
Check in with the auctioneer and complete any necessary paperwork.
Once you’ve filled out the paperwork.
You’ll receive a paddle that you can raise to make your bid.
- Some homes may be auctioned off online.
- If this is the case, check the listing of the home you want to purchase to find out when bidding opens and closes. Make sure you enter your bid during this window.
- Foreclosure auctions are typically hosted by trustees of the bank, while tax-lien auctions are usually hosted by a sheriff. If you’re bidding on an estate auction, the auctioneer will likely be someone who handles estate sales.
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Buy Restaurants/Bars @ auction
19. Raise your paddle to bid on the property you want to purchase.
The auctioneer will call out a bid. If it’s a price you’re willing to pay.
Hold up your paddle to show that you are bidding.
The auctioneer will continue to call out increasing bids until no more paddles are raised.
The person who made the highest bid will win the auction.
- The starting bid may be the amount owed on the property.
- But it could be less, depending on the situation.
- The starting bid may be less than is owed on the property.
- If the lender wants to encourage bidding or the home is worth less than is owed.
- Keep in mind that some auctions have a reserve bid, so the property may not go to the winning bidder if the reserve isn’t reached. These are called lender confirmation auctions. In an absolute auction, the winning bidder always gets the property.
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20. Pay your auction fees and earnest money before leaving the auction.
The winning bidder will pay any bidding or auction fees related to the home.
Additionally, you’ll be expected to pay a down payment.
You must pay this before you leave the auction.
Or you’ll likely lose the property and the money you’ve put down so far.
- In most cases, you’ll pay with a cashier’s check, money order, or cash.
- Check the auction listing to find out how your auction house takes payments.
21. Submit a certificate of sale receipt to the county recorder’s office.
In some areas, this document is called an execution of sale receipt.
The certificate of sale receipt shows that you are acquiring the property from the lender or owner.
It starts the transfer of the property to your name.
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22. Buy title insurance to protect you from existing debts.
Even if you conducted a title search, it’s still possible to inherit debts from the previous owner.
The best way to protect yourself from these debts is to buy title insurance on your title.
Before you take possession of the home.
That way, the title insurance will cover any outstanding debts that you learn about in the future.
- You don’t have to buy title insurance.
- But it does protect you from unexpected liens, mortgages.
- And property taxes already levied against your new property.
- Your real estate agent can help you find a title insurance company.
- Or you can search for one in your area by going online.
Buy Restaurants/Bars @ auction
23. Expect the sale to be ratified by the court in the next 30 days.
The local courts will review the auction and ratify the sale.
In some cases, this may take just a few days, but you may need to wait an entire month.
You will not take possession of the property until after this period.
- The courts will review the paperwork to make sure the lender or other entity had the right to sale the home.
- This gives you time to finalize your paperwork and secure the rest of your funding.
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Buy Restaurants/Bars @ auction
24. Finalize your home loan, if you have one.
Now that you know the purchase price of your new home, you can complete your loan.
Visit your lender in person or go to their website to complete the necessary forms.
Then, sign the required paperwork.
- If your lender requires an inspection, you can complete it during this time.
- Fill out your paperwork as soon as you can so you can pay for the house quickly.
25. Pay your balance and receive your trustee’s deed on your settlement day.
The auction house or local courts will set a settlement day for you.
This is the day when you will complete the transaction and take ownership of your home.
You’ll be expected to pay all outstanding fees.
Then the auction house will provide you with your trustee’s deed showing you own the property.
- After your settlement day, you are the official owner of the home and can take ownership of the property.
26. Buy Restaurants/Bars @ auction
Working with a real estate agent and real estate attorney.
will help you complete the purchase of your home with less risk.
Although the cost is slightly higher.
These professionals can help you avoid purchasing a home.
That carries heavy debt or is in poor condition.
Conclusion
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In some cases, local laws and ordinances allow owners to reclaim their auctioned home if they pay their back taxes or liens within a certain period of time, which is often 120 days. Since lenders aren’t required to wait this period before auctioning the home, it’s possible that your home purchased at auction could be reclaimed by the owner, depending on the laws in your area.
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If the former owner or their tenant is still in the property after you buy it, you’ll need to start eviction proceedings to get them to leave.
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