Financing Question

[flip_it_fast]

Someone asked me a question the other day about financing a home being auctioned. The question was.. Could they bid on a house up for auction, put a few thousand down on it and finance the rest through a bank using collaterol?

My answer was that yes there is a chance that they could but that it certainly is not definite. The better thing for them to do is to get pre-approved first. Have an inspection done on the property before completing any transactions.

Anyone have anything to add?

I would definiteyl not want to jump into an auction not even knowing if I could foor sure come up with the money! I highly doubt that would make the auction house very happy!

[House on the Prairie]

My understanding of housing auctions is that you have to have the cash. All of it. That's why so many investors are swooping in to take some of these homes off the market--they have the capital to both outbid and outmanuever anyone else. If a person was going to take a loan from a bank, they'd have to have a way to secure it, and it wouldn't be at the available low mortgage rates. No bank in their right mind would give someone an unsecured loan with the hopes that they'll win the bid for a house the bank hasn't even appraised.

[flip_it_fast]

A lot of the auction houses will take a down payment and then they require the rest in full within thirty days. Thirty days go pretty fast though and sometimes you have your hiccups when it comes to obtaining financing. Thats another reason why I said they should get their financing in order first, regardless of the thirty days.

[Eyeofngt]

I agree with flip. If you are going to a house auction and do not have the cash, you have to be pre approved by someone to back up the money you are bidding.

The ones that I have seen they all pay cash for what the bid on. I will do some checking to be sure that is the way it is done and let you all know. Get all the facts before you even attempt to bid at an auction.

[House on the Prairie]

Not only that, keep in mind that home auctions are always purchased in as-is condition, sometimes without the benefit of a home inspection. You really have to know your houses to make sure you not only know what a house is worth, but how much it's going to cost to get it to where it needs to be.

Before we moved out of our old neighborhood, I would see those yellow "AUCTION" signs everywhere. It was so sad so see so many homes in such sorry states--and I don't mean that they were in that poor of condition. It's just tough to see a neighborhood ripped apart and sold to the highest bidder. But I will say that some of the homes that were purchased through the auction process really look great now, as if they've been given a new lease on life (hopefully for a profit).