You may have seen quite a few Houston-area condo auctions taking place over the last year; and for good reason. Many condo developers are unloading condos that haven’t sold in an effort to clear their books. In reality, purchasing a condo through an auction may be very beneficial to you, in terms of price.

However, there are a number of things you will need to do before you show up for a condo auction and expect to purchase a Houston condo.

Familiarize yourself with the Auction Process

First of all, you can expect the process to be similar to any other type of auction. You will likely need to register and show identification. In addition, you will need to come prepared with a cashier’s check. The value of your cashier’s check will vary depending on the expected selling price of the condo and the starting bid.

The cashier’s check that you will bring will be put into an escrow account upon winning the auction. In general, most building developers will require the cashier’s check to be at least 10 percent of the sales price. If your cashier’s check falls short, most developers will give you at least 10 days from the end of the auction to produce the money equal to 10 percent of the sales price for your down payment.

Consider Loan Pre-Approval

Another requirement will include proof of financing, which is typically due within a month to 45 days after the end of the auction. Most buyers will come prepared with their loan preapproval beforehand as to avoid any delays in the process.

You may attend a developer auction, which usually comes with a longer time frame than a foreclosure or bank auction, so be aware of the time differences between these types of auctions before starting the process. Bank auctions and foreclosure auctions usually require that the buyer come with the down payment and a loan pre-approval.

Research, Research, Research

In short, it is important to do your research before attending an auction for Houston condos, whether it is a lender auction or a bank auction. Research the auction company and study the fact sheets and property descriptions thoroughly. In addition, auctions typically come with their share of legal disclaimers, so take the time to understand these before embarking on an auction purchase.

Many buyers also take the time to really get to know the building in which the condo is located. It never hurts to research the condo building, the developer and the HOA. You may even want to take the time to talk to current residents about their experiences with the building and the HOA.

There have been many condo auctions for Houston condos over the last few months, including the Edge Condominiums, which recently sold 27 units through an auction sale. The developers of the Edge wanted to liquidate their remaining inventory, and did so through an auction. Bids for these Houston condos started between $90,000 and $140,000, which was a far cry from their initial sales prices of between $219,000 and $364,500.