Want to score a nice house at a sweet bargain? Then you must prepare for it. Whether you’re buying a house first time at a foreclosure or tax lien auction—this article will gear you up with essential tips and relevant information.
Here you’ll educate yourself on how do you buy a house at a real estate auction in Texas. Read till the end to fully grasp how an auction works so you can make a well-informed decision.
How Do You Buy a House at Auction in Texas: 5 Winning Tips
Buying a house at auction is undoubtedly profitable. However, buying a house at auction as a first-time buyer involves the risk of investing in the wrong place.
Worry not. You can prevent the risks involving an auction. Here is how to do it correctly—
1. Look for Auctioned Houses from Reliable Sources
First, you need to learn how to find homes for auction. You can learn about auction opportunities from various sources. But you want reliable sources.
Where to Find House Auctions in Texas?
Speaking of dependable sources with a vast experience in the field, Jones Swenson auctions contain a list of houses up for auction. You can find out about the auction houses in Texas simply by visiting our website.
Nonetheless, here are some of the common sources–
- Local newspapers
- Websites dedicated to auction information and execution
- Posts on courthouses
- Special real-estate auction subscriptions
- Collect foreclosure lists as an investor, etc.
2. Calculate the Risk and Benefits
Buying an auctioned house can have both benefits and risks. Generally, people buy a house at auction when the price is lower than the market value.
But it comes with some risks too. For instance, the property can have damages you didn’t know about! It can have unpaid taxes as well. Therefore, you must consider the risks and benefits of buying a house via an auction.
Other than these, people mostly ask for cash payments. You can rarely pay for the house with a mortgage. So, you must look closely at these matters and the risks and benefits.
But what are some possible solutions?
If you aren’t sure about the market value of an auctioned house, you should talk to a real estate expert. Also, if you are a flipper, never proceed without knowing the market value.
Additionally, homeowners don’t allow pre-checking their houses. But real estate agents or experts can obtain permission to tour an auctioned house. Hence, you should run it by a real estate attorney to evaluate the ownership, liens, and liabilities associated with the house.
3. Know the Payment Methods Available
Some of the most confusing questions are:
- How do auction houses work in terms of payment?
- Do you need cash to buy a house at auction?
Most of the time, you need to arrive at an auction with cash. Some buyers accept reliable payment methods like cashiers or bank checks.
Furthermore, you have to make the full payment. If not the full payments, the seller might allow you to make around a 10% deposit, and you will have 1 day to pay the full money.
Nevertheless, these are expectations. That means you can pay for the house through a mortgage. Hence, you must confirm the payment process beforehand bidding.
4. Focus on Finding a Great Deal
Budgeting is an important part of preparing for an auction.
Why? People decide to buy in the auction to pay less. Thus, ensure you don’t get carried away and pay more for a house.
5. Secure the Ownership
Let’s say the hammer stopped at your bid—what’s next? Most importantly, when do you make the payment?
The following section can help with finding further information on the post-auction situation.
What to Do After a House Auction?
To officially become the owner of the house, you need to complete a couple more steps, as follows—
Make a Deposit
Once you win the bid, you need to pay and obtain a sale contract. Generally, you don’t get much to make the full payment.
You either make the full payment immediately. Or you can make a specific amount of deposit. Next, you will be given 24 hours to make the rest of the payment after winning the bid.
You can make the payment in cash or with bank checks. The medium of payment will depend on the seller. Thus, you make sure you have the correct payment information.
Fix a Settlement Time
This is a part of the payment process. Here is how it usually goes—
First, your can ask your real estate attorney to check the property.
Next, he can talk to the seller’s attorney to fix a settlement time in 24 hours. In the settlement, you give the full bidding price of the property.
Get Funding Approval
This is the step you need to complete if you take a mortgage to buy a house in an auction. Once your mortgage application is approved, you’ll get a confirmation letter from your lender. Also, they’ll ask you to sign the mortgage contract.
This is the very final stage. You must ask your attorney to ensure the sale contact is okay. Additionally, your attorney needs to collect other documents important to the property.
Also, you need to ensure, together with your attorney the property doesn’t have any mortgages.
Thereafter, you, as a buyer and seller, sign the sales contract. Next, pick the keys for the new property. In other words, you have the title now.
Note that, in Texas, the entire process of obtaining the title can last as long as 10 days.
How Does a House Auction Work?
A House Auction, at its core, is a homeowner deciding to sell the property through bidding. Usually, the selling amount is lower than the market price. However, the price mainly depends on the two factors.
Factor 1: Why Do Houses Go to Auction?
First, why is someone selling the house, such as– a foreclosure auction or tax lien auction?
What is that?
When a homeowner can’t pay the mortgage, it’s a foreclosure auction.
On the other hand, it is a tax lien auction when a homeowner can’t pay an evaluated property tax.
Factor 2: What is the Type of Auction?
Another factor is the types of auctions, such as absolute bid or minimum/reserve bid auction.
An absolute bid means every bid amount will be higher than the last. The seller will already have a specified bidding amount in a minimum or reserved bidding.
All these sum up what is a house auction.
Want to learn more about the advantages of purchasing a home at auction? Check out the following section.
What are the Benefits of Buying a House at Auction?
Buying a house in an auction has several advantages that make it a popular option. Here are 8 evident benefits.
1. Fast Buying
Unlike buying traditional real estate property, you don’t need to spend time looking for a seller with a bargain price. All you need to do is participate in an auction and win a bid. Next, you get ownership as soon as all the papers are ready.
2. Lower Price
Generally, houses go to auctions with debts or unpaid taxes. Also, you will find abandoned homes. And the standard auction is also available at a good bargain.
Though the seller aims to auction properties at a good price most of the time, the prices also benefit the buyer rather than the seller.
3. Varieties of Houses
Properties go to auction for various reasons, such as fast sales, slow traditional transactions, or to get some quick cash. So, you’re likely to find different kinds of houses, including – duplexes, triplexes, condominiums, agricultural land, commercial properties, etc.
4. Bidding at Home
Most auction houses allow you to bid online. For instance, Jonesswenson allows you to bid over the internet from home. This eliminates the trouble of sitting through an entire auction.
5. Transparency in Pricing
Although you get very little information about a property in an auction, buyers don’t participate without researching. And sellers are aware of that. As a result, you are likely to get the right pricing.
6. Buying Houses without Negotiation
In an auction, your can bid according to your budget. That means you already know what price you will have to give if you win the bid. As a result, you can skip the back-and-forth bargaining or follow any specific tactic to sway the price toward you.
7. Assistance of Real estate Agents
You don’t have to take part in an auction solo. Rather, you can seek assistance from real estate agents, such as realtors and brokers. They can facilitate smooth transactions with their expertise.
8. Less Paperwork for Bidding
To bid online, you must register on an auction website like jonesswenson.com. That requires simple document submissions like official identification, proof of funds, and legal papers. It’s true for in-person auctions as well.
Finally…Should You Buy Houses at Auction?
Buying a house in an auction entails both advantages and disadvantages. Therefore, if you plan to participate in an auction, ensure you have researched the property well.
If there is any confusion, you can talk to an expert, such as a real estate agent, about whether to bid for a house. We hope these tips help you decide better to buy a house at an auction in Texas or anywhere.
Want to secure a house at an ideal price? Jonesswenon arranges real-estate auctions helping buyers get a house at a lower price. Contact us today to bid!
Need more information on buying a real estate at auction? Check the following queries.
How long can I stay in my house after auction in Texas?
You need to move out as soon as possible. Otherwise, the new buyer will evict you. However, the new owner is supposed to give your 5-day notice before the eviction.
Is it worth buying property at auction in Texas?
Yes. It is most profitable for people of want to flip houses. This is profitable for investors as well. However, it can also be a good deal for general home buyers if they proceed smartly. And, jonesswenson.com confirms you get a transparent real-estate deal in Texas.
Do you need the full amount to buy a house at auction in Texas?
Yes, you must be ready with the full bidding amount in cash. Initially, you can make a down payment with a cashier’s check if you want. However, you must pay the full amount within 24 hours.
Do you have to be pre-approved to buy house at auction?
Yes, you need to register first to confirm that you can pay the bidding amount. This ensures you’re serious about an auction.
Do you need a mortgage for an auction property in Texas?
No. All you need to do to buy a house at an auction is come with hard cash or a cashier’s check to make a 10% down payment. Generally, you can’t pay for a house with a mortgage.
What happens if a house fails to sell at auction?
Usually, the lender will take the house when you fail to sell a house in a foreclosure auction. However, sometimes the auction can offer a post-auction sale where you ask the interested buyer to take the house at a different price.
What will happen after the house is sold at auction in Texas?
After selling the property at auction, you leave the house soon. Otherwise, you will get a 5 days eviction notice. Also, the Sherriff’s department will change the locks. Additionally, you don’t have the right to buy the property unless you are a tax lender or government entity
What fees do you pay when buying a house at auction in Texas?
You need to pay a 10% auction fee. Besides, if the seller has bank interest and penalties, you have to pay for those too. Additionally, you pay attorney fees, caring, and property preparation costs.
What happens if you buy a property at auction but can’t pay in Texas?
If you fail to pay the amount once the bidding stops to your amount, there will be financial and legal penalties against you. That’s why there’s a prequalifying stage.
Is buying a house at auction in Texas safe?
Buying a house without thorough inspection is not safe in an auction. The house can have structural issues, and you might not be allowed to check. Moreover, the property can have debts or other liabilities. So, it’s better to consult a real estate attorney.
Can you buy an auction house with a mortgage?
Typically, you can’t pay for an auctioned house with a mortgage. However, it depends on the seller if buying a house at auction with a mortgage is an option. So, you better confirm it before planning for the auction.