Buying a House at Public Auction

It's impossible not to notice all the houses listed for public auction in the real estate ads these days. I'm going to go to a couple just to see what happens, but I don't know if I'm a thick skinned enough to deal with the premise. The fact is, if a house goes up for auction, somebody is going to buy it, it's not going to remain with the owners, unless they are there bidding. If the property is being auctioned for non-payment of the mortgage, the bank will send a representative to bid up the price to the minimum they are willing to accept. Otherwise, the bank will come away owning the house and try to sell it again later.

I stopped by my bank to ask about the certified check for $5,000 required to bid in the auction, and they told me, "We don't do certified checks anymore." The teller assured me that I needed an "Official Check" made out to the firm running the public auction. I called the auction company, and they said, "Absolutely not!" They want a certified or other official bank check made out to myself, which I can sign over to them if I win the bidding. After that, I'd have thirty days to show up at the lawyers office with the rest of the money.

I asked the auctioneer about showing up at another house auction they are holding in the area this week, and was told they encourage all potential bidders to attend a couple of other auctions before trying to bid. I also learned that the average auction only takes from 10 to 20 minutes, and in many cases (like the house I'm interested in) there's no showing, no chance to get into the house before the hour of the auction. In fact, they also encourage potential bidders to check their website right before leaving the house to attend the auction because many are canceled at the last minute if the owner of record comes up with the money owed.

Some of the areas I need to research further are other liens that may be announced at the auction and may or may not devolve onto the new owner. These could include regular real estate taxes or other town assessments that could boost the true cost of ownership by thousands, maybe tens of thousands of dollars. There may also be some other disclosures, like the need to redo the septic or the toxic waste dump in the backyard.

It would be nice to get some basic facts about the property or current mortgage from the registry of deeds, and on the bright side, all of the registrars in Massachusetts have online sites. On the downside, I was unable to locate the house, a plan or land at the county registrar online with the address or the mortgage reference book page and number provided by the auction house. This means I'll have to drive up there and ask. So, it's a learning curve, and even if I never bid on a house, I think I will show up at a couple of auctions just to see what happens.