{"id":17464,"date":"2020-06-29T10:24:05","date_gmt":"2020-06-29T17:24:05","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=17464"},"modified":"2022-02-17T06:46:28","modified_gmt":"2022-02-17T14:46:28","slug":"buyer-how-to-bid-on-a-house-at-auction","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-how-to-bid-on-a-house-at-auction\/","title":{"rendered":"Here\u2019s How to Bid on a House at Auction and Snag a Great Real Estate Deal"},"content":{"rendered":"

You\u2019ve found a house you like and pulled a bid together. Now, you find yourself at the county courthouse, heart thumping as you raise your paddle in the air and bid on that house at auction.<\/p>\n

You\u2019ve probably heard that buying a house at auction can get you a really good deal, but if you\u2019ve never attended a foreclosure auction<\/a> before, then you might not know the first thing about how to bid! Here\u2019s how to get your bid in order and how to bid on a house at auction so you can walk away as a homeowner.<\/p>\n

\"\"<\/a>
Source: (LightField Studios \/ Shutterstock)<\/figcaption><\/figure>\n

Understanding auctions<\/b><\/h2>\n

Retail auctions<\/b><\/h3>\n

\u201cThere are a lot of different types of auctions,\u201d says Erick Monzo<\/a>, a top-selling real estate agent in Detroit. \u201cFirst, there\u2019s your retail auction company, like Auction.com<\/a> and ServiceLink Auction<\/a>.\u201d These were brought to life during the housing market crash, Monzo explains, because banks were looking for a quicker way to dispose of their assets.<\/p>\n

When you participate in these types of auctions, the bidding is web-based, Monzo says. \u201cThey require your typical earnest money deposit<\/a>, which is normally done through credit cards, and contrary to what you might hear, the majority of these auctions do still pay a buyer\u2019s agent commission<\/a>.\u201d<\/p>\n

Monzo says that every real estate auction house has a different platform when it comes to bidding. \u201cIf you\u2019ve done 100 deals through Auction.com and you go over to Hudson and Marshall, it\u2019s not the same,\u201d he says. So even if you\u2019re not new to real estate bidding but are<\/i> new to a specific platform, you\u2019ll want to do your research, so you can come to the table prepared.<\/p>\n

HUD auctions<\/b><\/h3>\n

A HUD auction<\/a> is a foreclosure auction on homes that were financed by the Department of Housing and Urban Development (HUD), a federal agency instead of a private mortgage lender. \u201cThese auctions aren\u2019t your eBay-type auctions,\u201d says Monzo, \u201cthey are closed auctions.\u201d That means that everyone who wants to bid can do so, but they bid without having any idea what the others are bidding. \u201cNot even the listing agent knows,\u201d Monzo says.<\/p>\n

The bids are then sent to the asset manager via HUDhomestore.com<\/a>, a secure website, and opened the next day in privacy. The auctioned home is awarded to the highest bidder.<\/p>\n

Courthouse auctions<\/b><\/h3>\n

Courthouse auctions take place at \u2014 you guessed it \u2014 the county courthouse \u201con a specific day of the week and at a specific time, every single month,\u201d explains Monzo. \u201cThese are all homes that are being foreclosed on by a bank or whoever the note holder is,\u201d he says.<\/p>\n

Unlike retail and HUD auctions, if you want to bid at a courthouse auction, you must be physically present. If the auction is a large tax lien auction<\/a>, each bidder will receive a paddle to raise when they want to bid, Monzo explains. If it\u2019s a sheriff\u2019s sale auction<\/a>, all bidders gather in a room together and simply raise their hands when they want to place a bid.<\/p>\n

\"A<\/a>
Source: (Ketut Subiyanto \/ Pexels)<\/figcaption><\/figure>\n

Bidding at an auction<\/b><\/h2>\n

Step 1: Get your bid together<\/b><\/h3>\n

Most home auctions operate in cash, meaning you can\u2019t buy a house with a mortgage<\/a>, though one exception to that rule is a HUD auction. \u201cRemember, though,\u201d says Monzo, \u201cThese are typically distressed homes that don\u2019t have utilities turned on, so even if the auction allows mortgages, a lot of the time the mortgages can\u2019t close because of the condition of the home.\u201d<\/p>\n

So, in nearly all cases, you\u2019ll need to get your cash in order before the auction takes place. It\u2019s also not usually enough just to have the funds available; you often have to prove that you have the financial means to bid on a house before you can register for an auction, so make sure you have proof of funds or some other documentation.<\/p>\n

At a courthouse auction, for example, Monzo says you must have a cashier\u2019s check for the full asking price of the home. If you end up bidding over the asking price, the additional funds are due almost immediately, normally by the end of the day.<\/p>\n

You\u2019ll also need your earnest money available (usually 5% of the purchase price) after the auction, should you be lucky enough to be the highest bidder.<\/p>\n

Step 2: Find your auction<\/b><\/h3>\n

Real estate auctions can happen at the county courthouse, at the property itself, or online. Monzo says that to find an upcoming auction, just check out some of the major traditional residential real estate websites, like Zillow or Realtor.com. \u201cThe auctions are all published there now,\u201d he says.<\/p>\n

After you\u2019ve identified an auction that you are interested in,<\/a> you\u2019ll want to check to see whether it\u2019s an absolute auction, meaning the holder of the note will accept any price; a minimum-bid auction, meaning you have to bid at least the minimum amount; or a reserve auction, where the winning bid is essentially an offer to the seller, who can decide to reject the offer if they think it\u2019s too low. Knowing the type of auction you\u2019ll be participating in will help you have a better idea of how much you might spend.<\/p>\n

You can bid anytime before the bid closes in an online auction, but if you want to purchase an auction at the county courthouse, you\u2019ll have to attend the auction in person and bid when the home you\u2019re interested in comes up for sale.<\/p>\n

Step 3: Register to bid<\/b><\/h3>\n

After you\u2019ve identified the auction that you want to bid in, the next step is to register to bid at that auction. If you\u2019re bidding at an in-person auction, bring your proof of funds with you so that you can register. If you\u2019re bidding online, you may have to pay a deposit in order to be able to bid on homes.<\/p>\n

As Monzo mentions above, at a courthouse or sheriff\u2019s sale in-person auction, you\u2019ll be given a bidder paddle to raise when the auctioneer reaches your desired price \u2014 or, it could be a silent auction, where everyone submits a bid separately and the home goes to the highest bidder. If you\u2019re participating in a silent auction, make sure you bid your very best price, since you won\u2019t have the opportunity to know what others are bidding.<\/p>\n

Step 4: Listen!<\/b><\/h3>\n

This is the part of auction bidding where your listening skills come in. If you\u2019re participating in an in-person auction, you don\u2019t want to raise your paddle at the wrong time (or, heaven forbid, for the wrong house), so listen carefully and stay alert as the auction progresses.<\/p>\n

When the auctioneer recites your price for the house you want to buy, raise your paddle, and stay alert so you don\u2019t miss out on a chance to outbid a competitor. If there are multiple people bidding on the home you want, you\u2019ll likely have to raise your paddle more than once to stay in the auction, but know what your top price is before you begin bidding so that you don\u2019t get swept up in the moment and pay more than you want to during the auction.<\/p>\n

Step 5: Fork over your earnest money<\/b><\/h3>\n

Congratulations, you got the house! Now it\u2019s time to pay the earnest money. Earnest money is often due the same day or 24 hours after you bid, which is why you had to have it ready.<\/p>\n

After paying your earnest money, a variety of things will happen depending on the type of auction you participated in.<\/p>\n

For a retail auction (like Auction.com), the auction house will start preparing your title right away. \u201cClosings are typically 30 to 60 days later,\u201d Monzo says.<\/p>\n

During a HUD auction, buyers paying in cash can close the deal in just a couple of weeks. If you\u2019re mortgaging your HUD auction home, it will take about 30 to 45 days for the home to close.<\/p>\n

At courthouse or sheriff\u2019s sale auctions, the buyer cannot take possession of the home for six months, says Monzo. That\u2019s because the homeowner may still be able to reclaim the property by paying the money owed on it. Should that happen, the homeowner must pay you back \u2014 with interest.<\/p>\n

\"Hundred<\/a>
<\/a> Source: (David McBee \/ Pexels)<\/figcaption><\/figure>\n

General tips for bidding on a house at auction<\/h3>\n

Before you bid on a house at auction, keep these tips in mind:<\/p>\n

1. Try it out first<\/b><\/h4>\n

Attend a few auctions without intending to bid on anything; this will give you a sense of the cadence of these events.<\/p>\n

2. Get there early<\/b><\/h4>\n

Auctions don\u2019t often last a very long time! If you show up on time, you might miss it, so come early.<\/p>\n

3. Check to see if you can view the home ahead of time<\/b><\/h4>\n

If you\u2019re bidding with an auction company, Monzo says you\u2019ll be able to see the home beforehand about half of the time, unless the home is owner-occupied and still in the redemption period.<\/p>\n

If you\u2019re bidding on a HUD home, you can walk through the home before the auction with a real estate agent, he says.<\/p>\n

If you\u2019re bidding on a courthouse or sheriff\u2019s sale home, however, you won\u2019t be able to see the home you\u2019re bidding on \u2014 so do your due diligence to ensure you really want it.<\/p>\n

Now that you\u2019re prepared to bid on a house at auction, get out there and find your dream home!<\/p>\n

Header Image Source: (Curtis Adams \/ Pexels)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019ve never bid on a house at auction before, you might be intimidated. Here\u2019s how to bid on a house at auction so you can walk away as a homeowner.<\/p>\n","protected":false},"author":163,"featured_media":17466,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[192,629,635],"tags":[],"class_list":["post-17464","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-for-buyers","category-home-financing","category-auctions-foreclosures"],"acf":[],"yoast_head":"\nHere\u2019s How to Bid on a House at Auction and Snag a Great Real Estate Deal<\/title>\n<meta name=\"description\" content=\"If you\u2019ve never bid on a house at auction before, you might be intimidated. 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