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How does an auction work? Can we use VA loan on an auction?

We're moving in June, so I think we have time for short sale or auction.
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February 01 - US
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Answers (4)

Every auction has different rules, be sure you read the terms and conditions of any auction you bid. 


An auction is a great way to buy or sell real estate. 


Most auctions for real estate are cash transactions. You will need to have your your financing in order before the auction. If you can not close in the allotted you will most likely lose your deposit, and may be liable for any loss the seller takes if he or she has to sell the home again for less money. 


That being said, you should look for an auctioneer that is a member of their State auction association and the National Auctioneers Association, they are bound by a code of ethics. Look to see if the auctioneer has the NAA's Accredited Auctioneer of Real Estate (AARE) designation (I hold this designation). Also check for their rating on the Better Business Bureau (our firm is rated A+).  Ask for a bidders packet, you are usually buying the home "As Is" so you will want to do your "due diligence inspections" before you bid. The auctioneer may have inspection reports, inspection reports, a lead statement, and a seller disclosure form. 


An auction "works" like this:

In an typical real estate auction you will bring a deposit to the auctioneer and register by showing your drivers license. After you register you will receive a bidder number. The auctioneer will hold your deposit (request a receipt for it). Check to see if the auction is with a reserve or no reserve. An auction with no reserve is an auction where the property will sell to the highest bid regardless of price. The auctioneer and the seller may not bid on the property in a no reserve auction. In an auction with a reserve the auctioneer will require a minimum bid under which the property will not sell. The Uniform Commercial Code UCC 238 has been adopted by every state but Louisiana. It was written to cover Personal Property but it has been applied by the courts to apply to Real Estate on many occasions. 


Many auctions now have an on-line part as well as an in-person part. You may find yourself bidding against others on-site as well as those bidding from other cities, state or even from another country. 


To bid you will hold your number up. It is wise to not stand there with your number up but to flip it up and then quickly back down. As an auctioneer I love it when a bidder simply stands there with their card up, it allows me to count faster and change the bid increment (say from $500 per bid to $1,000 per bid). 

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February 02
I agree with the previous contributors regarding Auction Sales and VA loans. 
VA loans are "government" loans and require the collateral (subject property) be in acceptable condition, and, you would want to make sure that your lender can close your loan in the allotted time frame. This can also be a challenge as a VA appraisal is required by a VA selected appraiser (another third party that could impact your ability to close on time). 
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February 01
Sheriffs auction or aka foreclosure auction or aka trustee auctions require cash.

Private auctions have rules that you must read and know before bidding. You can use a loan but you better have it started because they usually require money in 20-30 days and the auctioneer adds about 10% to your bid as their commission, so be aware.

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February 01
What type of auction are you referring to?  A sheriff sale auction?  Estate auction?  Where are you buying?  The best thing to do is find a savvy Realtor in your area who has extensive experience helping buyers purchase in not so traditional ways.  If you find a property you are interested in, an inquiry needs to be made whether the seller will accept an offer using VA financing as the conditions are more stringent than going with a "conventional" loan.  They don't have to but if the offer is good enough and if the property will "qualify", they may.  As far as short sales, I have helped buyers purchase short sales that closed in a normal time frame, i.e. 30-60 days, and I have had short sale offers accepted by the owner but never came to fruition as the bank did not cooperate.  Again, you  need an experienced Realtor who will stay on top of it if you decide ti pursue a short sale.  It can be very trying and is definitely not for everyone.
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February 01
 
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