Auctions: The Latest Trend in Home Buying

By Sheryl Landrum
Home Worth Columnist

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Home auctions aren’t just for homeowners in danger of foreclosure anymore. Lenders and builders with too much inventory are also getting involved. What are home auctions and can you benefit from them when you're buying a new home?

Lenders and builders with too much housing inventory are beginning to look at trying to resell excess homes by auction. Home buyers are getting more involved as they see the potential to purchase a home for a bargain or for less cost than going through normal home buying channels. Before you rush out to make a bid, however, here’s what you need to know:

• Find out what the minimum deposit is for the auction house make the sale. Most require a minimum deposit (usually a few thousand dollars) and allow you 30 days to come up with a deposit. Many lenders gladly offer to qualify you for a new home loan.
• Determine your maximum price before buying a home at auction. If you are serious about the property, preview it before the auction (most auctions hold an open house before the auction) and take a home inspector with you. Get a good idea of the home’s value and determine what you are prepared to offer.
• Do not let emotion override your house buying plan. Getting caught in a home buying bidding frenzy can waylay your plans to purchase a bargain home.

If you are considering a home auction when buying your next home, remember you can always take a real estate professional with you. Ask the auction house if they pay the agent’s commission--many do. If you decide to try an auction, happy house hunting!

About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage of San Diego at the Prudential Realty Office in Bonsall, California.