You might’ve tried and were unsuccessful at buying a house through traditional real estate methods, or you’re a prospective buyer interested in the benefits of buying a house at auction. Sometimes home buyers feel disempowered through traditional real estate. Either way, purchasing a home via auction is a great option for modern home buyers for several reasons!
With online platforms, real estate auction is easier than ever. Today the real estate experts at RE/MAX Auction House discuss their top tips for how to buy a house at auction. Learn about financing and bidding, as well as get the answers to frequently asked questions and more below.
Secure pre-approval before you bid
Before you search for a home via online auction, you should secure pre-approval for financing. This is because getting an approved home loan can be a lengthy undertaking. The application process, paperwork, credit checks, and other factors can extend the time it takes to secure a home loan.
Our biggest tip for buying at auction: account for the unknown and start the financing process as soon as possible. Planning ahead through pre-approval is much easier than falling behind once you find a listing you love.
RE/MAX Auction House has a 30-day window for payment. Though this is still some time, 30 days does not always account for unforeseen things that can hold up the financing process. Unless you’re a cash buyer, getting pre-approved for financing is key.
Bidding online for a home
Once you’ve secured financing, the fun begins! Browse home auction listings, find the listing(s) you’re interested in, and tour in-person or online. Each listing includes the auction timeline information for when bidding starts, starting bid price, property features, high-resolution photos, and more.
Earnest money deposit
We require an earnest money deposit to bid on a listing. These good faith deposits (that go toward your final closing costs) ensure that the sale will not fall through if you are the winner of the auction. An earnest deposit can also lower your closing costs, since it functions like an advanced payment.
Typical bidding process
Once you secure financing, you will register to bid for the listing(s).
After you register, there is a pre-auction window. The auction timeline window can run between 30 to 90 days, so you have some time to secure financing if you’re pre-approved.
When the auction timeline starts you will have full access to view other bids throughout the duration of the timeline. This is in exchange for a 10% buyer’s premium. You can bid confidently throughout the auction by knowing how your bid measures up to the competition.
If the auction goes beyond your budget, it is easy to bow out. You can also set up maximum bids / escalation clauses to participate in the auction automatically.
Notifications throughout the auction via our app
You don’t have to sit in front of your computer for the duration of the auction to stay in the loop! Along with bidding remotely through the auction platform BidWrangler, you can also set up convenient notifications for the auction sent straight to your mobile device.
Simply download our app for notifications about open houses, reminders for the auction timeline, and much more. It will even notify you when someone outbids you, so you can easily increase your bid to stay in the running.
Making early bids / offers
Some of our online auction listings offer the opportunity to bid and make offers early. This means that you can avoid competition during the auction window and potentially buy a property even quicker!
If a listing allows early offers, it will have this information displayed. It will also provide specific instructions on how to submit an offer before the property goes to live auction.
Submitting an early offer that’s accepted gives you a unique advantage. You get to bypass the process of monitoring the auction and potentially upping your bid price, making it a really simple way to buy a house at auction.
Bid clock extensions
During the final minutes of an auction, last second bids can come in. The auctioneer and listing may be able to extend the bid clock anywhere from 120 seconds or a few minutes longer. What a rush, right? 😅
This gives other bidders time to decide if they want to continue bidding on the listing or stop bidding.
Though a bid clock extension doesn’t always happen, it’s a nice feature to ensure everyone has a chance for a final bid before the auction closes. Plus, we have to admit, it’s just plain exciting!
How To Buy a House at Auction: FAQs
We answer some of your most commonly asked questions below.
Do I need financing before I bid?
Yes, you need to secure pre-approved financing before you bid on a house at auction.
Do I need a buyer’s agent?
No, you do not need a buyer’s agent to buy a house at auction. RE/MAX Auction House is staffed with highly qualified agents who are ready to help on your behalf for anything from A to Z. We offer you our experienced guidance, support, and help in every way possible.
That being said, it’s okay if you happen to have an outside buyer’s agent already. We are happy to work with other agents through this process.
Do you offer traditional real estate services?
Yes! We offer both traditional and online auction sales. We are a team of real estate agents and brokers, and we hold an auctioneer’s license. If you prefer a traditional home buying experience, we are more than happy to assist you and help you find what you’re looking for.
What is the fee structure to buy from RE/MAX Auction House?
Buyers pay a 10% buyer’s premium to purchase properties using our auction platform. This is in exchange for an established buying timeline, transparency for bidding competition, and all listing information available in advance.
Do you need cash to buy a house at auction?
For RE/MAX Auction House, you do not need cash to buy a house or property at auction with us. You do need pre-approval for financing in order to bid.
Can first-time buyers buy at auction?
Absolutely! Buying a house at auction is a great option for first-time home buyers because you can get great prices with competitive bids.
The Benefits of Buying a Property at Auction
Now you’re familiar with the bidding process and some of our most frequently asked buyer questions.
Here are the key benefits for buying online through auction:
With traditional real estate, it’s hard to know how fast the availability of a listing will change. This is not the case for online real estate auctions thanks to our fixed timelines. The listing goes up with the fixed timeline for everyone to see, and the auction will close on an established day.
As a buyer, this gives you clear information on when everything will take place. For many people, this significantly reduces the stress of buying a home.
One of the most difficult things as a buyer is not knowing if your offer will be accepted. Often you don’t know the number of other interested parties and how much they’re offering, so you can overestimate or underestimate your offer.
In the traditional home buying process, this makes buyers feel like they’re in the dark. With auction, you know exactly how many people are bidding PLUS their offers. Many find purchasing at auction gives them ultimate transparency to help guide their decision making.
Speaking of decision making, many buyers feel more confident and empowered when bidding through online auctions. They know the competition, the prices of other bids, and exactly how much time they have to make their decision. This creates an empowered buyer who knows if their bid is likely to win. This also helps buyers know when they can stop bidding and move on to finding a different property.
The fixed timeline, transparent process, and empowered bidding for buyers are all tremendous benefits for purchasing through online auction.
Contact our team at RE/MAX Auction House for more information on how to buy a house at auction!
Our team of real estate professionals has over 50 years of combined experience. We offer both traditional real estate listings and online auction listings, and we love providing our services for our buyers and sellers. Proudly associated with RE/MAX for the last 37 years, RE/MAX Auction House is advancing the real estate industry through our online auction platform. We serve the greater Kansas City metropolitan area and surrounding regions.
For more information on buying a home at auction, reach out to us online or at 816.741.0123. We can also help you secure financing with one of our trusted mortgage lenders.