Buying a property at auction will likely be different from every other real estate transaction you have participated in. Traditional real estate sales follow a set flow that is largely based on local and state norms. Think pre-qualifying as a buyer, inspections, offer, counter-offer, closing, etc.
Luxury real estate auctions jump outside the preset sales flow that you have seen with other sales in your area. All of the details are clearly set in the Auction Terms and Conditions of Sale, so it is important that you review and understand those terms fully if you plan to buy a house at auction.
Here are some items that you will likely find in the Terms and Conditions of Sale for house auctions:
A description of the auction format: An absolute auction means that the property will sell to the highest bidder on auction day, whereas a reserve auction means that there is a minimum threshold the bidding must exceed before the seller is obligated to sell.
Details on the rules of the auction: This includes registering for the auction, methods of bidding, and other details such as the auction start and end times.
Deposit requirement: Nearly every luxury real estate auction will require you to submit an escrow deposit or cashier’s check before you are given a bidder card. Review the Terms and Conditions to find out how much the deposit is and where and when it should be delivered.
Financing information: The sale is most likely a cash transaction, which means there is not a contingency for financing. Closing is generally 30 days after the auction ends. So, if you do plan to finance the purchase, make sure your funding is lined up ahead-of-time, or you might lose your deposit.
A description of the Property: This seems like a no-brainer, but don’t forget real estate auctions are different from traditional real sales. Most properties that sell at auction are sold “as-is,” so be sure you are familiar with the exact address and location of the property being sold. Additional details such as the formal legal description, title report and survey will likely be available upon request.
These items and more are included in the Terms and Conditions of Sale for each real estate auction that we conduct, and you should be able to find the same in the Terms and Conditions of any real estate auction that you participate. Make sure you review them in detail, so you can bid with confidence when the time comes.
Ask me your questions on how to buy a house at auction in the comments. Or try our Free Dowload below for 7 Steps to Winning at Auction.
