The Ins and Outs of Auction.com

Auction.com is one of the lead companies in the United States selling properties both commercial and residential for lenders, builders and developers.  My main focus today is explaining foreclosure auctions for residential homes.  I though this important to write about because twice now in the last six months, my clients have fallen in love with a home that has already been placed in an auction.  Both of them with Auction.com.  If this is a situation you come across, here is what you need to know…

What to do first:  Visit the Auction.com website and find out if you can submit a pre-auction bid or if you can bid online.  They only allow certain homes to sold in a pre-auction form or to be bid for online.  I an not sure how that is determined.  In both of my situations we either missed the pre-auction bid date or online bidding was not available.

Preparing for the Auction:  Lets just assume that you were unable to bid in the pre-auction.  If that is the case, you will need to do a couple of very important things before showing up to the actual Auction.com auction.  First, you need to understand that a home bought at auction is bought AS-IS with NO inspection period.  If you want a home inspection, you must do so before hand.  The listing agent is supposed to hold a few open houses in the weekends prior to the auction.  This is the time to have an inspector go in there look the place over.  Or better yet, if you are working with a good Real Estate Agent, they will insist that an inspection is conducted and they will arrange it and be there with you.

Ok, the inspection is complete and you feel that you can live with the condition of the home.  Now you need to register online at Auction.com.  If you are working with a Realtor and they have agreed to be there with you on auction day, you will need to ask them for their Real Estate license number because that will be required on the form.  PRINT THIS FORM!  That way, if you computer at check-in is saying that you have not yet registered, you will have all the info on the form that the check-in person will need to re-register you… Yes this has happened to me before!  If you do have a Real Estate Agent, they will also register ahead of time and they will need to bring along a copy of their RE license and a W-9.

What to bring on Auction Day:  This is IMPORTANT… If you do not bring the following items, you will not be able to bid on a home during that auction.  First, you must bring a $2500 cashiers check made payable to yourself.  You must also bring a personal check to pay the remainder of the balance for the required 5% earnest deposit.  These amounts change if you are planning to purchase mulitple homes.  See the webside for additional information.  Secondly, unless you are planning to acquire financing through available lenders at the action, you must bring a Pre-Qualification form from your chosen mortgage company.  If you would like to acquire financing at the auction you will need 2 years of tax returns, W-9s and 30 days of pay stubs. Finally, you will need a valid photo ID.

What to Know:  IMPORTANT IMPORTANT IMPORTANT… You must know about the required 5% premium charged by Auction.com.  This is howAuction.com makes their money.  Let the math do the explaining….

Your Winning Bid $200,000

Buyer’s Premium 5% = $10,000

Total Purchase Price = $210,000

5 % Earnest Money will look like this- $2,500 Cashiers Check and $7,500 personal check due on auction day.

What to Expect:  Expect competition!  You almost always will be bidding against an investor.  They have cash and they know what that house is worth to them.  Don’t expect a deal!  The investors are keeping it fair.  You may get the house below appraised value, but don’t expect go get a move-in ready single family-detached home for $20,000.  The investors want the quick flips or easy rentals and they will do their best to win the bid.  Ask your Realtor to run comparisons of the home and discuss what the home is worth and what it will appraise for.  If you were willing to make an offer on the home before you knew it was pre-auction, then make that offer price your highest bid (don’t forget to add in the buyer’s premium).  I would feel safe guessing that more then half the winning bids will go to the investors.  Be prepared to pay what the home is worth, then you will set yourself up to be pleasantly surprised if you get it for less!

If you do have the winning bid, a nice lady dressed in black will come get you and take you “behind the curtain.”  There you will pay your earnest money, sign your purchase contract and provide them with your lender information.  It is my understanding that all sells will be given a 30 day Close of Escrow.  Please talk to your lender about this before hand and be sure that they will be ready to close in 30 days.  For most this is doable but can be difficult if a holiday weekend falls in to that time frame.  They have a lot to get done in that short amount of time.

Okay, I believe I have covered the important stuff.  If you have questions… Auction.com has Live Chat agents available all the time to help you out.  They have walked me through the process a couple times.  Also, if you live in the Phoenix area and feel overwhelmed by the whole Auction.comprocess, please contact me at the phone number below and I will assist you through the whole process.  Good luck bidding!

Are you shopping for a new home?  My name is Tiffany Pettit and I am the Peoria, Arizona Real Estate expert.  My husband, Eric, and I live and raise our two boys in this beautiful west Phoenix suburb.  We love everything about our little city and think you will too!  Please contact me anytime at 602-614-6493, toll free at 888-897-7821 x.132 or at tiffany@tiffanypettit.com.  Please check out my website, www.CometoPeoriaAZ.com, where you can perform an MLS search just like an agent would do.  I look forward to assisting you in finding your perfect Peoria, Arizona home!