Buying a home at a home auction is not a new process, but it’s one that’s unfamiliar to most. There are lots of myths surrounding home auctions, and plenty of people who think of a home auction as a last resort, rather than a first choice.
RealtyHive (through HomeSmart) is here to clear the air. Knowing about home auctions could make your next home purchase easier—and could even save you money.
Types of Home Auctions
If you think a home auction only happens in the event of a foreclosure, you’re not alone. However, there are actually multiple types of real estate auctions:
Foreclosures are time-consuming and expensive. When a homeowner owes more on their mortgage than what the house is worth, they might have the choice to put their home up for a short sale auction and avoid foreclosure.
From a buyer’s perspective, this type of real estate auction has its pros and cons. Home inspections are a toss-up—you might be able to get one, or you might not. Oftentimes, these sales are cash only, which works great for some, but isn’t ideal for home buyers needing to finance the purchase. Short sale auctions are also difficult to find for regular home buyers.
There area also regular short sale homes for sale, but not in a short sale auction. For example, here are current Single Family detached Short Sale Homes For Sale in the Phoenix Arizona metro area.
The name changes depending on location, but this is a foreclosure auction. The bank wants to get the money or the property. If you’re able to purchase, you’ll need to have the funds right away and there are typically no inspections. More often than not, you’ll buy without even getting to see the site first. As an example homes that have been taken back by the Lender or HUD are often put back on the market as bank owned foreclosure homes. For example, here are Bank Owned Homes For Sale in the Phoenix Arizona metro area.
Regular real estate auctions happen at the seller’s choice—they’re not foreclosing or at risk for it. Interestingly enough, this type of home sale happens a lot in Europe and Australia. Home auctions are just beginning to pick up speed in the US.
Auctions can have high fees—15% at the highest. Whether they’re paid for by the seller or the buyer depends, so as a buyer, your expenses could dramatically increase. These fees do not include working with a real estate agent—an additional 6% commission on average.
That being said, luxury properties often sell faster at an auction than if going the traditional route. If you’re looking to buy an average/regular home and are in the US, it will be harder to find one through real estate auctions.
This is an exclusive home auction, available through RealtyHive. Here are some of the draws:
Benefits of Time-Limited Events for Home Buying
Don’t require a reserve
The market helps find the right price.
Contingencies are still allowed
Buyers (and their potential investment) are still protected.
Unlike other auctions, buyers can still apply for loans to finance their home purchase.
No crazy fees
Buyers are waived from having to pay expensive fees.
Time-limited events work for all types of properties, including vacant land and commercial properties.
But don’t feel as though you have to take our word for it—this blog is for information purposes, not a sales pitch. No matter the buying route you go, it’s good to know how home auctions work. (Source: HomeSmart/RealtyHive)
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