How to buy at home auctions without getting hammered

How to buy at home auctions without getting hammered.

Orson Scott, the American novelist once said: “Unemployment is capitalism’s way of getting you to plant a garden”. We could adapt that quote to say, unemployment is capitalism’s way to say, your house is going to have to go, man. That has been the message many have sadly heard in the last months. The current economic slump has caused many not to be able to afford the interest, never mind the capital of their home loans. The solution? Often, the only solution is to kiss the home goodbye and lose any equity or investment one might have put in the home. Often one of the only ways to make the sale happen, and happen quick is to sell the house in a house auction.

Let’s spin the table now. We will now presume you are one of the lucky few who invested wisely and have the cash or the access to credit in these difficult times. If that is so, you could tap into a currently very popular way of buying a home, home auctions. The secrets to a successful home auction buy are simple to grasp and this article aims to set out the basics.

1) Check out the house, impulsive buying is not often a good idea.

Notice how the chocolates, magazines, sweets and other nice but not necessary junk is right next to the cash point at supermarkets. The reason? Impulsive buying. Although there is no great harm in the occasional impulsive mars bar, the odd impulsive home buy will bankrupt you rather quickly unless you are very wealth in which case you don’t need to read this article.

Check out the homes on auction. Visit them, view them if you can. If you can’t view them, read the surveyors report on them. Phone the estate agent that controls the auction and ask for all the information they have on the house. Ask what guarantee they offer on the homes and if there has been a survey of the structure and services. Although home auctions can spell out a great opportunity it can also spell disaster if you don’t do your homework before you bid.

2) Decide how much the house is worth to you and set that limit in stone. This is really part of step 1, but it is so important we have set it as a step of its own. You need to decide what the house on auction is worth to you. This should be based on the market value of the home. Once you have a maximum price, stick to it and never bid over it. House auctions can develop into wars (which is what the auction house and seller are hoping for) and you could end up paying more than the market value, the unforgivable  sin, if you are buying a house at an auction.

3) Get your finance arranged before the auction. Before you go to the auction, arrange a line of credit your bank or finance company is happy with. That way you will not incur in the expense and frustration of dropping a house you have won a bid on.