Buying from Auction.com

[Jhirae Talmadge]

I just came across Auction.com and wondered if any one from the BP community has ever purchased property from the website? I seen a few properties I was interested in. Are pretty much all the properties bank owned at a auction?

[Cindy Mata]

I purchased an Auction.com property this past May...truly accidentally. I just starting in flipping in Jan 2018 and was looking for my second flip property as my first was starting to wind down, so I decided to explore the online auction world. I had watched some online auctions but never bid. I found a property that I toured several months before and hated because of the very odd floor plan that I expected no buyer would want. The house had actually been on the market for years, and vacant for close to 10.  It eventually went to auction and when I started poking around at Auction.com I noticed it listed and that it previously went under contract at $165K and was back active again for some reason at $140K with 4 days to go. It also said "conventional financing considered". So I thought this would be the perfect house to put a token bid on just to learn the steps of submitting a bid, as more bids would go in as it got closer to the end of the auction and outbid me. Well...4 days later I receive an email saying "Congratulations! You are the winning bidder!". 

Pretty sure I almost fainted. And then I had to tell my husband, "Oops, I think I accidentally bought a house". So that was fun. We did not meet their reserve price so I thought that was my out, but Auction.com said they will still submit the bid to the seller if you are within a certain range, which I was (fabulous). Fannie Mae was the seller and they decided to accept the bid (even more fabulous). We then started the process to apply for conventional financing on the property. There are no contingencies, so even if we qualified for the financing but the appraiser determined that the property didn't qualify, it wouldn't matter and we would lose our $7,500 EMD.

I believe we could have gotten out of the deal in the very beginning if I truly bought a disaster, and we likely would have forfeited at least our $2,500 credit card hold, although Auction.com was never 100% clear about that. I think it would have been up to Fannie Mae to decide whether to enforce that from what they explained. The next step was the $7,500 EMD required, so if the financing fell through we were up to forfeiting $7,500. There were so many times I wanted to just pull out because I was afraid of the unknown, but thankfully we pushed through at the expense of some sleepless nights. We were approved for the loan and closed about 45 days later, using my own title company. It was a relatively straightforward, yet a slow process.

I GC'ed it because I didn't exactly budget for one in my "accidental" purchase. It needed a lot of work to the "guts" of the house (crawl, electrical, plumbing, etc), but we were able to leave a lot of the cosmetics alone which the bank had actually replaced not too long before we bought it. We spent about $31,000 on the rehab. After running the numbers I decided to flip it rather than keep it as a rental, so we went on the market at $244K and actually went under contract in 5 days. We just closed on 9/5 and netted about $29K after everything else. 

Overall I found purchasing from Auction.com to be straightforward, although personally I always prefer to use my own title company even though it costs a little more. My only advice would be to make sure you are really ready to buy if you decide to click the "bid" button! :)