Andrew and I began looking at buying a house around February 2016. With our marriage on the horizon, we thought it was the perfect time to start looking for our first home. While the thought of a move-in ready home was appetizing, we knew we’d enjoy a house that needed a little love (or a lot) – so we kept our expectations low. Additionally, we wanted a way to get a deal on a house. Enter: Auctions.
Most people I’ve spoken with have been semi-freaked out by the idea of buying at auction – they have the idea of driving to the courthouse with $200k hard cash in your pocket and wading through a sea of people to place your bid. To many-a-surprise, this was NOTHING like our auction experience! Here’s what happened…
- Scouting. We watched zillow.com like hawks (please do this if you’re in the market!!). Andrew found our house listed as a “foreclosure” and began investigating.
- Investigating. He drove by the house and actually saw workers evicting the residents (sad!). He took the realtor’s name and number from the “For Sale” sign and called in to find out when the house would get on the market.
- Listing & Financing. Within a couple weeks, the house was listed on homesearch.com for an online auction. We never went to the court house once! Additionally, the bank who had possession of the house decided they would accept traditional financing for the house (conventional or FHA loan) rather than requiring hard money. This meant we could officially move forward!
- Prepping. The house was up for auction for 7 days. During this time we toured the house with our realtor and scheduled an inspector. The house was being sold as-is, so the inspector helped us understand what we were getting ourselves into. Even though we didn’t know if we would win the house, we still wanted an inspection before we placed a bid.
- Estimating. The investor gave us his evaluation on the price of the house and helped us estimate the costs to fix the broken stuff. With these numbers we came up with our max bid. Andrew and I promised each other that we would not get caught up in the bidding-moment and go over our max bid.
- BIDDING! Approximately 30 minutes before the end of the auction, we placed our first bid (fortunately, Andrew’s extensive eBay experience paid off here!). The starting bid was extremely low – around $68,000. There’s a threshold bidders must reach in order for the house to sell, but they don’t tell you what it is – it ended up being at about $180,000. One other person was online bidding against us, but fortunately they didn’t drive up the price too much. After the most stressful 10 minutes of my life (the other person would wait until the last 10 seconds to place a new bid, then the timer would go back up to 9 minutes), we won the house at $205k!!! Plus another $10k for the “auction fee,” our total came to $215k. This was a beautiful thing, as our house was later evaluated at about $224k. We ended saving almost $10k on our house!
- Closing. The rest played out as if we were purchasing a “normal” house – a million papers to sign, documents to submit, blah blah blah. We won the house on April 13 and closed on May 13, so the process moved pretty quick!
All in all….
If you’re looking for a deal on a house, definitely consider buying at auction. If you’re willing to put in the work that a foreclose will probably require… This. Is. The. Way. To. Go. While some banks require cash or a hard money loan, this case accepted traditional financing – so these houses are out there! All-in-all, I think the process has come a long way from what people are used to hearing about.
I’m so excited to show you all the cleaning, scrubbing, painting, scraping, cleaning, decorating, and cleaning thus far! No jokes – our first floor looks like a different house… and we haven’t even been here a month!
Anyone else buy a house at auction? A foreclosure? Any good ideals? Let me hear it!