Buying a home at auction can be a good way to save money. It's amazing how little some beautiful homes go for. Buy buying at auction is not foolproof. It is possible to overpay or to buy a home that needs far more work than you realized. To avoid these unfortunate situations, try not to make these mistakes when buying a home at auction.
Mistake: Getting caught up in the bidding war.
Some people refer to this as the "eBay syndrome." You make a reasonable bid, are outbid, and then bid more – not because the item is worth your higher bid, but just because you can't stand to let the other bidder win. It may not be a big deal when it happens over a $20 item, but it's certainly something to avoid when you're spending thousands on a home.
To avoid getting caught up in a bidding war, decide beforehand how much you are willing to spend. Bring a friend or family member with you to the auction, and tell them your budget limit. Ask them to remind you of that limit – and hold you to it – if you start to get overly zealous and tempted to overbid.
Mistake: Taking on more renovations than you're capable of making.
If you plan on remodeling the home yourself, make sure you don't end up over your head in jobs you don't have the skills and resources to complete. For instance, if a home needs foundation repair and you have no experience with this type of work, you're usually better off walking away. The exception, of course, is if you know you have the money in your budget to pay someone else to make these repairs.
Mistake: Looking only at the home – not the neighborhood.
When you plan to buy a home at auction, you're often forced to search over a larger region rather than in a specific neighborhood – simply because so few homes are sold at auction. So when a home pops up for sale, it might be in a neighborhood you don't know a lot about. Don't just show up to the auction and bid based on the home itself.
Spend at least an hour or two looking into the surrounding neighborhood first. Check on the quality of the school district, how close the home is to the thruway, crime rates, and whether there's an HOA. This will give you a better idea of what a fair price for the home is and help you avoid buying a house that's hard to sell later.Share