Kokomo Real Estate Auctions
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You and Kokomo Real Estate Auctions
There is an interesting article in the Arizona Republic– Do Your Homework Before Home Auctions. Even though Arizona is a higher priced market than Kokomo, it has some very good information about foreclosure real estate auctions. It is well worth reading.
Basically, there are three kinds of auctions that involve real estate in Kokomo:
- Tax Sales
- Sheriff Sales
- Auction Company Sales
Back in August, we talked about the differences and similarities between Tax Sales and Sheriff Sales in See You At Auction. Today let’s look at auctions by companies, specifically the big out of town companies that sell foreclosure homes.
There are several national companies I know of that have sold (or tried to sell) Kokomo area foreclosure homes through auction. There are probably more, but these will do for now:
Each company has their own set of rules and requirements for bidding on a property. But here are some of the general requirements:
- Earnest money deposit. All require a cashier’s check or credit card verification for the minimum deposit BEFORE you are even allowed to bid on a property! The minimum deposit is usually $2500-5000 or 5% of the purchase price of the property – whichever is greater.
- Buyer’s premium. Most companies charge you 5% of the purchase price to pay their expenses.
- Cash only properties. Some companies decide that properties under a certain price must be sold for cash only.
- Financing. If you are financing the purchase, you must have a pre-approval letter for the “listed” purchase price of the property.
- No contingencies. All properties are sold “as is, where is”. There is no inspection period, no financing contingency, etc. If you back out of the deal for any reason, you lose your deposit!
- Bidding process. Most require that you actually attend the auction to bid. That can mean travelling to Indianapolis, Muncie, Elkhart, etc.
- Winning the bid. You may win the bid at the auction; but your bid goes to the selling bank that may or may not accept the bid.
Until I read the article in the Arizona Republic, I didn’t understand how buyers left an auction thinking they had bought a property, only to find out the bank rejected the bid. It seems that the auction companies make an “educated” guess as what the bank will accept. Sometimes they are right. Sometimes they are wrong. When they are wrong, the properties go back on the market in Kokomo with a REALTOR®.
Bottom Line – All auctions carry potential risks and potential rewards. Only you can decide whether the reward outweighs the risk in your situation. And the best way to do that is to go to the auction websites. Read everything about their terms and conditions. If you are unsure about some of the terms and conditions, contact an attorney for advice.
If you go to an auction or have been to one, please share your experience with us. You can post your comments below or you can call me (765-513-0354) or send me an email.
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