Important terms to know:
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Checkout Form The form filled out by the high bidder of a property after an auction. The form includes specifics about the property including the purchase price, credit card details, and the buyer’s contact information. Closing Process Congratulations! You’ve made it to the final steps in a successful property purchase. A standard closing for a cash deal is 15 business days, and 30 business days for financed deals. The process includes signing paperwork, setting a closing date, and transferring ownership from the seller to you. Earnest Money Deposit A deposit you make that lets the seller know that you are serious about buying the property. This deposit will be applied to the purchase of the property upon closing. The amount of deposit will vary by asset type and must be submitted within 48 hours of executing your purchase agreement. Purchase Agreement A legally binding document that governs the purchase and sale of a property between you and a seller. It defines the terms of the transaction and the conditions under which a sale will be made. |
At this point in the auction lifecycle, you have bid like a pro and won the auction. The post auction, or buying, phase includes how you will pay for the property, fees associated with the property, documents you need to close, title, and the general closing process.
I’ve won an auction...now what?
Typically, the immediate next step after winning is to fill out a checkout form that asks for things like how you want the property to be vested (that is, whether you want to put the property in your name or the name of a business entity), how you will be paying for the property (e.g., with cash, a hard money loan, or traditional financing), and which closing office you want to use.
This form will be submitted to the seller to review and then approve, reject or counter the bid. Remember, the majority of bids placed in auction events are subject to the seller’s approval.
If your bid is countered, you have 48 hours to respond with another counter or accept the seller’s counter price. If your bid is rejected, the seller generally submits the property into a new auction event. If your bid is accepted, you move forward with the closing process.
The closing process is where the buyer and seller’s teams (e.g., closing office agents, title attorneys, etc.) get in touch to finalize closing activities, including transferring the title from the seller to the buyer, writing up a purchase agreement, and moving the property into escrow.
The closing process from beginning to end can take anywhere from 10 to 30 days, but usually takes about 20 days.
Things to consider after winning an auction:
There’s a lot to do after you win a property at an auction. Here are a few things you’ll need to consider and have on hand as soon as the event ends in case you are the highest bidder.
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Financing
Depending on the property, you will need to have cash in the form of a cashier’s check, a hard money loan, or a traditional mortgage ready to purchase the property. You’ll also need to submit the earnest money deposit—the amount you pay that lets the seller know that you are serious about buying the property—within 48 hours of winning the bid.
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Fees
The fees associated with buying will vary by property, but generally include the total purchase price, buyer’s premium (if applicable), the earnest money deposit, closing costs, and attorneys’ fees.
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Title
Depending on the property, you will either receive a quitclaim deed, a special warranty deed, or a general warranty deed.
While there’s a whirlwind of activity that happens just after an auction, don’t forget to take a moment to celebrate that you’re the highest bidder. Congratulations! Then, get started on your checkout form so you don’t miss the 24-hour window to submit your high bid to the seller for approval.