auction.com earnest money

[Nathan Riese]

I used auction.com today for the first time.  I won the bid at $600, I was the only bidder, and it says I met the reserve.  I have two questions:

(1) If it says I met the reserve, that means that the Seller has/will accept the offer, right? They can't counter or reject at this point, right?

(2) The contract says that I need to pay a $2500 Earnest Money Deposit.  But if my purchase price is $600, why would I need $2500 in earnest?

Here's what auction.com said about the transaction details:

• "Buyer will not be charged a Buyer's Premium for this property.
• If you are the Winning Bidder, an Earnest Money Deposit of 5% of the total purchase price or $2,500 (whichever is greater) is required.
• Buyer may receive a Special Warranty Deed or equivalent if Buyer is able to purchase title insurance without delaying the closing (title fees typically cost between $500 and $1500 and are based on the purchase price of the property). If buyer does not purchase title insurance, buyer will receive a Quitclaim Deed or equivalent, with no express or implied warranties of title.
• Buyer is responsible for all escrow fees typically ranging from $850 to $1,375."

Thanks for any insight you can give!

[Nathan Riese]

For anyone who may end up reading this, as a follow up, (1) auction.com ended up not requiring the full $2500 deposit, since my purchase was less than the deposit requirement. (2) It took about 2 months to get the deed, because CHASE had a pre-foreclosure on it at the time of the auction, and so they formally foreclosed and then eventually got the deed, which they then eventually signed over to me.  Besides my $600 purchase price, I had about $300 in closing costs.  I to this day haven't seen the property.  I had my property manager break in (we had no keys), and he was able to rehab it for just $5000, and then I got it rented out for $525/month.  It definitely was a great deal.  I got lucky, because I really could have bought a lemon.  I was kind of just messing around by bidding $600 on it, but it's now part of my rental portfolio and is still rented out today!

So the conclusion is that I'd definitely recommend using auction.com again to buy more rental properties, or possibly to flip.