Ramblings of a Baltimore area Realtor: Financing Your Auction Purchase

Financing Your Auction Purchase

Financing Your Auction Purchase

So, you think you can buy an house at auction and finance it.  There may be some challenges to this and you have to be fully aware because your auction contract is a legally binding document and you could lose your deposit if you aren't able to act in terms with the contract.  

You will need to have your financing in place before you go to the auction.  Be sure you are strongly pre-approved and that your lender can close on a loan quickly.  You may want to shop around, ask for referrals or look for alternative financing types then refinance after closing.  

Things you need to consider if you are thinking about buying a home at auction and financing it:

  • Condition - most auction contracts are non-contingent and don't allow for an inspection.  You should have this done before the auction.  Keep in mind most auction properties are sold in "as-is" condition so you would likely need a renovation type loan which normally takes more time so any expense you incur for inspections and preparation may be out of pocket if you are not the successful bidder at the auction.
  • You need to be firmly approved before the auction.  Be sure your lender can settle quickly.  
  • Know the type of auction the property is.  Is it a tax lien sale, an estate sale, a foreclosure or simply a sale where the seller wants to settle quickly.  Some financing will not be available for tax lien sales or foreclosure type sales due to the chain of title. 
  • Be sure you are ready and you an move quickly and that you have everything ready, 30 d ays does not take long to pass
  • Keep in mind the buyer pays an Auction Service Fee or Buyer's Premium at closing in addition to the purchase price, this can be 5-10% of the winning bid price.  You need to add this to the winning bid price, be sure you qualify!!  Also, keep in mind that you are paying all the closing costs and depending on the title company this could be based on the winning bid price or the total purchase price including the buyer's premium.  Make sure you have these funds available to close and make sure you qualify!!  
  • The auctioneer and the auctioneer's staff represent the seller and can not give you advice as to value, condition, location or comparables.  You need to do your research, or better still hire a knowledgeable Buyer's Agent to represent you at the auction.
  • Once you sign the auction contract you are under contract, this is a legally binding document and there is no turning back, you can not withdraw for any reason other than not being able to get clear title.  Be sure this is what you want, buyer's remorse can be very expensive. 

I have represented many clients at real estate auctions.  I could also represent you too.  

If you are thinking of buying or selling an home in  Maryland give us a call at 410-292-0100 or start your search here and we'll talk about the market conditions and what your home could possibly be worth in today's market place if you are thinking of selling. If you are considering buying a home, there is no better time than now to buy. The tax savings and wealth building alone is worth the plunge into todays market.  Remax New Beginnings and I are connected with some of the brightest and best real estate agents in the world and can assist with your move here in Maryland or anywhere in the United States or abroad.  Ask me how.

June Piper-Brandon ~ Associate Broker ~ CDPE, CIAS, ePro, MRP

Long & Foster Hampden

410-292-0100 - Direct   410-889-9800 Office

City Living Expert







June Piper Brandon - Agent with Century 21 New Millennium

June Piper Brandon - Agent with Century 21 New Millennium

Comment balloon 3 commentsJune Piper-Brandon • June 02 2018 03:51PM


Good morning June - this is certainly good information to know.  I won't be a deal if you can't get it financed.

Posted by Grant Schneider, Your Coach Helping You Create Successful Outcomes (Performance Development Strategies) 12 months ago

Thank you for sharing.


Posted by Golden1 Agents 12 months ago

This is very good information to share with prospective auction purchasers.

Posted by Roy Kelley (Realty Group Referrals) 12 months ago

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