Closing the Purchase: FAQs About the Closing Process for Real Estate Auctions

The auction method of selling real estate is a fast, efficient, and transparent way to buy or sell property. Auction closings are typically faster and more straightforward than traditional real estate transactions (here’s a closer look at some more differences between the two). Essentially, sellers appreciate this efficiency, and buyers benefit from knowing the terms and conditions upfront. By removing contingencies and prolonged negotiations, the auctions create a smoother path to closing.

At NashvilleAuctions, we’re here to guide you through the final steps of closing to ensure an easy process from winning bid to exchanging the keys. Here are some frequently asked questions about closing on a property purchased at auction:

What happens after the auction ends?

Once the bidding closes, the highest bidder wins the property. Since the auction is absolute, the property is sold as-is with no minimum price or contingencies, meaning the sale is guaranteed to the highest bidder.

If you are the successful bidder, you will be required to put down a non-refundable deposit and sign an auction purchase contract and supporting documents. This contract outlines the terms and conditions of the sale, including the purchase price and deadlines.

Before bidding/in advance of the auction, it is the purchaser’s sole responsibility to:

1. Perform all inspections (legal, environmental, title, economic or otherwise) of the property. NashvilleAuctions can schedule an onsite visit based on a pre-auction offer and or you may hire an inspector to preform an inspection prior to the auction.
2. Review all property information. NashvilleAuctions will provide as much information about the property as possible. NashvilleAuctions ensures title work is completed ahead of the sale, but review any important information to ensure you’re prepared for any home or property conditions.
3. Inquire of public officials as to the applicability of and compliance with land use, zoning, building and health and safety codes and ordinances, and any other local, state or federal laws and regulations. Personal on-site inspection of the property is recommended, and bidders are advised to independently verify the information shared.

The closing date is usually set within 30 days of the auction, though this may vary depending on the property and auction terms. Be sure to review the terms and conditions of the sale (bid package) carefully, in advance, so you’re clear on the timeline and responsibilities. You’ll find a clear timeline from the moment the auction is scheduled.

How does financing work at closing?

You don’t always need to pay cash to buy a house at an auction, but you’ll need to make all financial arrangements before the sale to ensure a smooth closing process for all. Once the auction is over, a non-refundable deposit is due, which will be applied toward the purchase price at closing.

According to November 2024 data from the National Association of Realtors, 14 percent of recent home sales encountered delays. As delays in financing are one of the most common pitfalls for success, here are a few ways to help avoid them:

• Obtain pre-approval. Work with your lender before the auction to secure pre-approval for financing. This will give you a clear understanding of how much you can spend and ensure you can meet the auction’s requirements. If you must obtain a mortgage loan to purchase this property, you should bring a copy of a pre-approval letter from a qualified loan provider, although the pre-approval letter is not required to bid at the auction. If you decide to bid above the amount that you are approved for, you will be responsible for the gap difference between the appraisal and the final contract price. Keep in mind that auction contracts are not contingent on financing, so if your loan falls through, you may forfeit your deposit. You’ll need to bid accordingly and responsibly.
• Plan for the non-refundable deposit. Again, immediately after the close of the auction, the declared final high bidder will be required to pay a non-refundable deposit of cash, a cashier’s check, money order, or a good check. These funds will be available to the buyer at closing and the remaining balance will be due at closing.
• Budget for closing costs and fees. Closing costs for auction purchases may include title insurance, attorney fees, and transfer taxes. Factor these into your budget alongside the purchase price.
  • Buyers pay: Closing attorney fees, financing costs, lender requirements, title insurance, Tennessee state transfer tax, recording costs, property taxes from closing day forward, and a 10% buyer’s premium (calculated on the final bid price). In some cases, the buyer can elect, based on lending requirements, to reduce the final contract price to the final bid price and pay the buyer’s premium separately.
  • Sellers pay: Attorney fees and auctioneer fees. Sellers are responsible for ensuring the property is free of back taxes and liens.

Once title work and final payments are completed, the property officially changes ownership.

If you have a house that needs to sell prior to buying, there may still be an opportunity to purchase at auction. Contact NashvilleAuctions to learn more.

Closing Thoughts

At NashvilleAuctions, we strive to make the closing process as seamless as possible for all parties involved. Understanding the timeline and auction terms, preparing finances, and addressing potential issues proactively means a smooth transition from winning bids to proud property owners and sellers.

For more questions on the process, please reach out to our team. We’re here to help make the auction experience a success, from the first bid to the final signature.