Everyone loves a good auction. For some reason Auctions get everyone excited and though not very common, most people believe they get a better deal at an auction.
I think because the price starts low, but what most people don’t consider is that there are ten, sometimes twenty other parties bidding against you… and for some bank online auctions, the fine print allows the bank itself to bid against you!
How fair is that?
But that’s not where you need to watch out. The fine print can sometimes contain gotchas.
One Auction site (which will rename nameless), requires a $1000 deposit just to bid, paid by credit card directly online. This is their leverage to get you to submit the 5% non refundable earnest money should you win, EVEN IF YOU DON’T MEET THE RESERVE PRICE.
Yep, if you are the highest bidder, and still under their required reserve price, you are obligated to submit the earnest money and proof of funds within 48 hours or you lose your $1000 deposit. The bank will then have 15 days (holding your money) in which to decide to allow the sale to go through or not.
Now sometimes, you may be getting such a steal on the property that you don’t care, but if you are a ready, fire, aim type of investor, you could lose some money as a non-refundable earnest money deposit doesn’t care about your lack of financing.
Our advice, get representation (it’s free to you), and we’ve done it before.
Photo Credit: Bob n Renee