With this said, there are some words of caution.  As a real estate buyer at auction, you cannot be cautioned enough to read all of the details.  Be sure to review the Terms & Conditions of the Auction.  Review the Contract for Sale and Purchase that you will be expected to sign if you are resulting buyer.  Beware of the lack of contingencies in the Contract for Sale and Purchase, especially the lack of contingencies for further inspections of the property and contingencies for financing.  Understand what closing costs you will be expected to pay.  Review the Due Diligence Packet provided when registering for the auction.  Pay attention to deposit requirements and pre-registration requirements.  Auctions are usually cash sales.  If you intend to finance your purchase, be sure to have your financing arranged in advance.  Work with a mortgage company that has experience in financing auction purchases.  Most mortgage companies will require an appraisal of the property.  If your mortgage company requires an appraisal, make sure that they order it immediately following your signing of the Contract for Sale and Purchase.  Closing dates are usually strict with auctions.  Typically they will not be delayed if your mortgage company is not ready to close. Since appraised values are based on comparable sales, in times when real estate prices are on the increase it is possible that the sales price will be higher than the appraised value.  Mortgage companies typically lend on appraised value.  In any case you would be expected to cover the difference in cash between the funds provided by your mortgage company and the funds needed to close.  It is always best to only bid what you are able to cover in cash on the day of the auction, and reserve these funds for closing.  If your financing falls through, the sale will still continue.

It is also important to understand buyer’s premiums.  Typically a buyer’s premium is a commission paid by the buyer.  It is expressed as a percentage of your high bid, and is typically added to your high bid in establishing the price on the Contract for Sale and Purchase.  Only the purchaser of the property pays the buyer’s premium.  If you are not the high bidder, you pay nothing.  If you are the high bidder at $100,000 in an auction with a 10% Buyer’s Premium, the Buyer’s Premium would be $10,000.  This $10,000 would be added to your $100,000 high bid to establish a Contract Price of $110,000. 

Further, it is important to understand deposit requirements.  Real Estate Auctions typically require a deposit in order to bid.  This deposit is held by the Auction Business, and returned to you if you are not the high bidder.  If you are the high bidder, this deposit is applied to the total deposit required by the Contract for Sale and Purchase. 

Finally, inspect the property.  Do not rely on pictures.  It is said that a picture is worth a thousand words.  But putting your eyes on a property can be worth a thousand pictures.  You can save yourself a lot of grief, just by taking a little time to inspect the property in advance.