Auction Pitfalls, is there a downside to a $100 auction purchase?

[Dave Mason]

Hi all, as some of you know from my prior posts, I'm currently writing a novel that teaches principles of financial independence.

As part of my research, I was looking into real estate auctions. I watched one video, and it mentioned how there are some auctions that start as low as $100, and if there are no other bidders, you just might pick up a house for $100.

Now I have learned about a number of the downsides of auctions. You can get a house that's a disaster, especially if you haven't walked the property. If you haven't done a proper title search, you could get a house that still has a first mortgage, or even a tax lien upon it.

But here's my question. Let's say you were at an auction, and a house you hadn't researched came up for $100. There are no other bidders, and only a 20% deposit is required. So obviously, if it had other liens on it, you might want to walk away before closing and you'd be out your $20. But are there other downsides? Are you possibly inheriting any liabilities that you don't want, other than things that attach to the house itself?

What's a worst case scenario in a purchase like this?

For those of you who buy houses in auction, if you saw that you could get a house for $100 that you hadn't looked into, would you grab it and take the risk, or would you stay clear of anything you hadn't seen? Why?

Thanks so much,

Dave Mason