How To Buy an Auction House With Hard Money
So you’re buying auction properties. You need to get a loan in advance before you start to bid. I’m going to tell you How To Buy an Auction House With Hard Money.
Step One- Auction House Details
The first step is you need to submit the property details to us for the property or properties that you’re planning to bid on.
Why? Well, you need to go into that auction with confidence, knowing that you’re already approved with a loan.
What do we need? We are going to need the property information, property address, property details, what your max bid price would be.
Step Two- Get Approved To Buy The Home From Auction With Hard Money
Once you get the approval from us, you will know what the terms are for the loan and you’ll know if that’s going to work for you.
You will know if you can actually go and bid on this property or not. Are you going to have enough money to bring in as a downpayment or in repairs to make this deal work?
Step Three- Notify Us When You Plan to go to the Foreclosure Auction
Give us a heads up the day before the auction so that we know you’re still planning on going and bidding on a particular property that we gave you a loan approval for some borrowers.
Sometimes borrowers will wait to contact us until the actual day that they’ve won the auction and sometimes we’re not ready.
So we need to get a little bit of a nudge or a little heads up the day before you’re planning on bidding.
Step four- Auction Paperwork
Send us all of the paperwork that the auction house has given you on that property. We’re going to order a title report and we’re going to set up the closing.
Step five- Close on the property
And then finally, the best step of all, step number five. Let’s close on this property. We set up an appointment with you at the title company. We’re gonna have all of the documents sent over there.
The auction house is going to have their documents sent over. We’re going to wire funds in and we’re going to close.
And you are going be an owner of a property that you bought at auction!
Hard Money Auction Financing Terms
So what are the terms you’re asking now? What are the terms for a typical loan on an auction property?
Well, the terms are going to range from a loan amount for between 80 percent to 90 percent of the purchase price.
Why not 100 percent financing? Well, typically on auction properties, we’re not able to get inside the property and take a look at it before we give you loan approval.
So that’s why I say we can lend you anywhere between 80 to 90 percent of the purchase price for the property.
In rare events, we are able to get inside the property and we’re able to take a look at it before you go and bid at auction. In that case, we may be able to give you a loan for 100 percent of the purchase price, but this is on a case by case basis.
Hard Money Interest Rates
And then what is the interest rate of these loans? You’re going expect to pay anywhere between 10 to 12 percent in interest?
Interest rate interest only, no principal payments.
And then what are the loan fees? Anywhere from one to three points or one to three percent of the loan amount as a loan fee.
And then finally, the loan term anywhere from six to 24 months.
If you’re looking at properties to buy at auction, reach out to us and get pre-approved before you go and bid.
If you have any questions, leave them in the comments section below and we’ll do our best to answer those.