1. Understand How Real Estate Auctions WorkReal estate auctions offer a range of properties at different price points and include such things as single family homes, multi-family units, as well as some commercial properties and real estate notes. There are auctions for foreclosures, short-sales, and non-distressed REOs. Further, auctions can either be conducted online or in person.
Real estate auctions happen in real time or over a few weeks and start with a minimum price. From there, an auctioneer will allow competitive bidders to bid up the price of the property until a single bidder remains. At this point, the auctioneer will close the auction and award the property to the winning bidder. Depending on the auction, the bidder will either need to pay for the property immediately or pay a 5%-10% deposit and the remaining balance within 30-45 days. Check out our section on the different types of auctions below for more information.
A common misconception with buying houses at auction is that you can only purchase a house at auction all-cash, and this isn’t true. While the speed of auctions benefit all-cash buyers, you can still finance a house at auction through traditional loans. The downside, however, is that approval might take too long. Of course, always do your research before coming to a financing decision. For more information on financing houses at auction, jump down to our financing section.