Potential bidders in a real estate auction must be qualified financially in order to participate.
Because of the accelerated transaction process that typifies a real estate auction, buyers must come prepared to close within 30-45 days. The seller promises clear title at closing, ample inspection opportunities and a price he or she will accept that is often considerably reduced from a previous listing price. Therefore, bidders must be prepared to close.
This means that auctions are not a place for tire-kicking. Bidders must have cash or financing in place to close within 30-45 days. Winning a property at auction, then starting the real estate financing process, is not the recipe for success. Auction contracts provide for no financing contingencies and no closing date push-backs because of a lack of financing. Bidders unable to close on the specified date risk their earnest money and possibly even more. Sellers may seek additional compensation beyond earnest money from buyers unable or unwilling to close beyond.
Be sure to have your financing in order before registering to bid at a real estate auction. You’d certainly be wise to compare programs from more than one lender. It’s always important to get a second and even third opinion on important financial undertakings like auction financing.