Auctions provide great alternatives to homebuyers in Seattle that would wish to avoid the long traditional home buying process. Auctions involve the sale of undervalued properties to the public through competitive bidding. Homes are put on auction for various reasons, among them being the current owner’s inability to finish paying the mortgage. As such, the lender seeks to regain the amount remaining mortgage amount from the sale of the house.
The lender sets a guide price that shows the least amount of money that the house will be sold. The price often rises at the auction and the highest bidder wins the auction as soon as the gong strikes. Most Seattle modern homes on auction require the bidder to place a deposit of 5-10% of the bid and settle the rest within 28 days. Homes on auction are ideal for fix-and-flippers and long-term investors. When you opt to buy a home on auction, it is wise to be prepared.
Find an auction
The real estate industry has both live and virtual auctions. You may find an auction through real estate auction sites, real estate classifieds, county courthouse, and industry professionals. Your real estate agent is a great source of information on auctions and he/she will help you identify an ideal property.
Auctions require participants to register in the auction before participating for both live and virtual auctions. Usually, participation attracts a 5% down payment of the guide price. For a live auction, the winner settles the rest of the bid amount within 30-45 days. For an online auction, the winner settles the bid amount within 24 hours, otherwise the 5% deposit is held, and the house is re-auctioned.
Choose the right home
There are auction groups that often have a wide array of properties on auction available to buyers. The properties on auction include Seattle luxury homes to condos, penthouses, townhouses, single-family units, and much more. These properties come in different forms in terms of the condition of the house. Some homes on auction are still in top-notch condition while others are dilapidated and need intensive repairs and renovations. As such, it is best to know what you are buying before you participate in an auction. If you wish to buy a run-down fixer upper you should be aware that most lenders to not provide financing such homes.
Most people assume that auctions are only open to cash buyers. The truth is that there are numerous lenders that provide loans to buyers who wish to buy homes on auction. Financial institutions provide conforming mortgages insured by the FHA to fund the purchase of a home on auction. A buyer should first get pre-approved for a conforming mortgage in order to participate in an auction with a set budget in mind.
Conforming mortgages often require the buyer to purchase a house that is in near mint condition since the loan does not cover the cost of repairs and renovations. The loan amount is often 80% of the total purchase price.
Buying a home through an auction requires utmost precision and organization in order to find your ideal home at an ideal price.