The Upside And Downside Of Buying A Home At Auction
Posted on: 11 October 2017
There are many ways to buy a home, and one option is to attend real estate auctions and bid on homes that have been put up for sale -- usually by the bank. While this option does have its benefits, however, it is not the right approach for everyone. Before you decide to buy your next home at auction, take a look at the pros and cons of this approach.
Pro: You can get a deep discount.
Because most of the homes sold at auction are bank foreclosures, the banks are generally looking to unload them quickly. They don't need to get the home's value, but they do need to sell the home in order to stay solvent. There's no negotiation on price. You make a bid, and it is either accepted or denied. So, you are less likely to get "talked into" overspending than you are when buying a home conventionally.
Pro: Closing happens quickly.
Since you'll be buying the home directly from the bank, without the involvement of the seller or their real estate agent, the sales process is actually simpler from a legal standpoint. This may mean that your closing happens faster. Most people close within a month when buying at auction, whereas traditional sales may take two months or longer. If you are in a rush to get into a home, quick closing can make buying at auction your best choice.
Con: There may not be time for inspection.
When you buy at auction, you typically have to make an offer pretty much as soon as you see the home. There's not usually time for a home inspection. If you are very handy yourself and know a lot about building and maintenance issues, you may be able to detect flaws without an inspector. However, a lack of inspection opportunity could leave you with a home that needs more repairs than you expected -- particularly if you're not so well-versed in building and home improvement.
Con: You have to act quickly.
If you're the kind of person who takes a lot of time to make decisions, buying at auction may not be for you. You need to be prepared to jump on the right home the second you find it. This can make some buyers feel nervous or anxious, which is why the traditional buying process, which allows plenty of time for browsing and comparison, may be preferrable.
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