Online Auctions are becoming a more familiar way of buying homes in Huntsville Alabama. We are often asked what the risks are. There are many actually, but I will touch on just a few here.
Should I Buy a Home at Auction?
Many buyers that do purchase homes at auction in Huntsville pay cash…they KNOW what the risk is and feel the rewards are worth it. These buyers typically do their homework long before auction day. In this case, I say go for it!
For the buyers that are depending on financing, here are the reasons I say NO…you shouldn’t try to purchase a home at auction. Buying a home at auction is a roll of the dice.
A few important things to know about buying a home at Auction:
The home you bid on may NOT qualify under the lenders guidelines. These homes are sold AS-IS. If a lender required repair is needed, you are out of luck.
Need a new roof? Too bad…you’d better get your checkbook out. The seller is NOT going to do this for you. Have water in the crawl space? Again…that’s your problem. Does it have high levels of Radon? Oops…can’t help again! These are all very costly repairs.
To continue on towards closing, you will be responsible for ALL repairs. We had a buyer this week wanting to place a bid on an auction home. They are using a 100% loan product. Buying a home AS IS is too risky for them, we feel. Just because YOU are approved for the loan, does NOT mean the home is.
Earnest money is non-refundable after your bid is accepted. The typical earnest amount is around 5%. Is it worth losing your earnest money IF the home doesn’t appraise or the home has structural issues?
Get Everything Done Before the Auction
ANY and all inspections must be completed before the Auction begins. It is your responsibility to hire a home inspector BEFORE the Auction date. NO INSPECTIONS are allowed after bids are accepted.
A 5% Buyers premium is standard for many online auction companies, so be sure to check this before placing your bid! Your $100,000 bid turns into $105,000.
If you are serious about purchasing a home in Huntsville Al from an online auction company, I would make sure you are financially able to do so. I would HIGHLY RECOMMEND working with a qualified Huntsville Realtor that knows the ins and outs of online bidding. One wrong move, and you are left out in the cold. Buying a home at auction is a roll of the dice!