Auction Property Loans Phoenix AZ

Auction Property Loans Phoenix AZ

Auction Property Financing in Arizona

The auction is the process of buying and selling the goods, services or property by bidding. The buyers compete for the property by bidding and the highest bidder takes the property. The open ascending price method is the most common method of auction. People look to buy an auction property because these properties are usually short sale at approximately 30% lesser than the current market rate. The price of the property is decided under the Bank auction rules or Federal Guidance. There are only a few bidders at the bank auction these are usually people with ready money looking to invest in real estate.

If you decide to bid for an auction note;

  1. The Reserve Price – This is the Minimum Bid Price that is the price at which the bidding begins. These prices are set by the bank or the auction house. These bodies take over the property to recoup the remaining balance of the loan.
  2. Earnest Money Deposit (EMD) – which is the good faith deposit made by the potential bidder to show that he is serious about the deal. The EMD is refunded to the unsuccessful bidders. The successful bidder is expected to pay at least 25% of the total amount if not the complete. The entire amount is expected to be deposited within 15 days of the auction.

It would be prudent to know if there will be borough or municipal taxes, society dues and Tax Deduction at Source(TDS). There will be legal fees for all the processing of documents. Last but not the least do your homework about the area and the real estate market before going in for the auction property. Most of the people who go in to buy real estate at an auction usually have ready money at hand but if they don’t then they avail to loans.

The Period depends on the type of financing you can benefit from are Fix and Flip, CRE, CMBS, Hard or Private money, etc.


Auction properties can be financed with a variety of loans; such as,

  • CMBS loans with a term of 5 – 10 years and an amortisation period of 25-30 year. The rate of interest may vary from 3.6 – 6% with the smallest lending of 5 million for a 20 years amortisation
  • Soft money loans have rates between 6.5 – 18%.
  • Fix and Flip lending spans over a period of 12 months with a rate of interest 7 – 12% and no pre-payment penalties.
  • Hard money loans may span from 1 – 5 years at a rate of interest 10 – 21%. Higher the risk higher will be the rate of interest. The points may range from 2-4% of the borrowed amount, the Loan to Value ratio and After-Repair Value (ARV).
  • The CRE loans may term over 5 – 20 years at the rate of 7% and amortised over 30 years.

How to qualify for these loans?

These parameters will be considered for approval of your application;

  • Credit History
  • Debts
  • Sources of Income
  • Assets

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