Buy at housing auction

If you're buying at the housing auction at the courthouse steps, there are some pitfalls you need to watch out for:

1. It's an auction so the price is determined through competitive bidding. In an auction you may get into a bidding war that could cause you to overpay for the property.
   
   
2. Auctions operate as strictly cash operations. You'll need money for the deposit which is usually $5000. In addition, within the next 24 to 48 hours (depending on the court system), you'll need the money to cover the rest of your bid. For example, if you bid $50,000 for a property, in a day or two you will need the remaining $45,000.



3. Bid rigging could occur. Two or more bidders may conspire with each other to bid up the price of properties they don't want just to get people out of the way, so they can't bid on the properties they do want. They could also trick you into thinking there's a bidding war on a property that just one of them is interested in.



4. You can't back out of a deal. If you bought a house that later turned out to be contaminated or otherwise not insurable, you could not get your money back.