Due in part to the popularity of the U. S. Department of Housing and Urban
Development (HUD)’s home auction program, more potential homebuyers than ever
are buying homes at auction. Homes for auction aren’t limited to just HUD,
however. Many government entities auction homes for payment of back taxes, and
some homeowners even auction their homes on eBay.com!

Homebuyers considering buying a home at auction should take some steps in
advance to help them with their bid price, and even whether to bid at all on a
specific home. There will always be a degree of risk when buying a home this
way, but with a little diligence, potential homebuyers could save a lot of money
buying in this manner.
Before the auction, you should have your financing arranged, and have enough
cash on hand or in your bank account to cover a deposit on your purchase. You
need to check the features, location, condition, and ownership history first.
Afterwards, be sure to learn what the property is worth by looking at sales of
comparable properties in the same area. Compare homes with the same number of
rooms is possible, but be sure to allow for price differences due to pools,
decks, carpeting, window treatments, etc.
At the auction itself, resist the temptation to get into a personal bidding
war, just “to beat out the other guy”. Have a set price limit and stick to it.
Other houses will come along, and you don’t have to win the first auction that
comes your way.
You should know that the price of a home at auction is typically the loan
balance (if foreclosed), plus any back taxes owed, plus legal fees and other
expenses in foreclosing the property. This will typically be the opening bid
amount, and the price will go up from there. Even so, it’s possible to get a
great deal in an auctioned house, with a little research and planning first.
Also, know that you probably won’t be able to get an inspection, and are
buying the home “as is”. If you can’t do any needed repair work yourself, or
can’t hire it done within your budget, you may not end up getting such a bargain
in the end.

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