How to Buy Land at Auction

Contact a specialized attorney or real estate agent. If you are inexperienced with the land auction process in your locale, it may be worth your time and money to hire help. Real estate attorneys and agents will be able to help you get your ducks in a row prior to the auction date. In addition, they will be able to help you reasonably value the property you are interested in so you do not overbid. If you are the successful bidder, attorneys and real estate agents will prepare closing documents and help with the transfer of ownership.

• To hire an attorney, visit your state bar's website and locate their lawyer referral service. This will allow you to talk to someone about your needs. In return, they will give you a number of qualified attorneys to contact.
• To hire a real estate agent, look online for brokers or companies that offer auction services. In addition, because you are looking for land, as opposed to residential or commercial property, try to find an agency that specializes in that area.

Find land auctions near you. Land auctions take place all around the United States and can be conducted by governments or private auction houses. Start your search by visiting county treasurer or tax collection websites.^[1] Public (i.e., government) land auctions are often conducted by the county where the property is located. In addition, check your local newspaper for auction notices in your area. Finally, find private auction houses in your area that sell land. These are particularly prevalent in rural areas.

• In recent times, land auctions have also gone online. Check with your county to see if they offer this service. For example, Palm Beach County, Florida offers an online auction service for their foreclosed properties.^[2]

Attend auctions as an observer. In order to get comfortable with the auction process and the auctioneer (e.g., private, public, or online auctions), visit multiple auctions and simply observe. See how the auctioneer runs their activities, assess the requirements regarding finances, observe other auction goers to get an idea of their demeanor, and analyze the typical lands up for auction. All of these things will give you a great idea of who you want to work with in the future.

Keep track of properties that come up for sale. As time passes, auction brochures will be placed online or at the auction house. These brochures will contain information about the land up for auction. The information will generally include:^[3]

• The parcel number
• The amount of land available
• The specific location of the land
• Access points, including right-of-ways
• Where you can find the survey (usually at the county recorder's office)
• Restrictions
• Other notes

Check the terms and conditions of the auction. Most auctions have a set of terms and conditions that go along with their sales. This document will lay out exactly what you can expect if you purchase land from that auction. For example, the Michigan Department of Natural Resources includes the following information:^[4]

• What types of properties are offered
• What the minimum bid prices are
• Whether there is a reserve on a particular piece of land (i.e., will it not sell if the bidding doesn't reach a certain price)
• The type of title that will be conveyed
• When property taxes will be due
• How and when you can get possession of the property
• Conditions of the sale

Schedule a tour of the property. Once you find a property that interests you, set up a time to view the land. If you are working with a private auction company selling land that is not subject to a forced sale (e.g., for delinquent taxes or foreclosure), you will usually be able to walk through the land and assess it. Call the private auction house you are working with and ask if they offer tours. If so, schedule a time that works for you.

• If you are looking at purchasing land that is going through a forced sale, you may not be able to gain legal access to the property. This is the case because the government or bank auctioning off the land does not yet have an ownership interest in the land. Technically, it still belongs to the borrower or delinquent taxpayer. If you are in this situation, you can still visit the property and view it from public space. Do not, however, walk onto private land without the landowner's permission.

Study comparable properties. In order to get an idea of the value of the land you are interested in, you need to look at comparable pieces of land nearby. For example, if you are looking at buying farmland in South Dakota, you should look at the appraised value of the next door neighbor's land, or have an appraisal done on the land you are looking at. Do this with multiple properties nearby to get an estimate of what the auction land may be worth.

• It is important to accurately value the auction property as it will dictate how much you are willing to bid and how much financing you will need to have in place.

Secure financing. Once you estimate the value of the property you are interested in, you need to figure out a way to pay that amount (in case you are the highest bidder). Some auctions, generally private auction houses selling land at-will, allow you to finance your purchase (i.e., get a mortgage). However, a lot of auctions, usually forced sales, require you to pay the full purchase amount as soon as the auction is complete.^[5] Call the auction house with the land you are interested in and ask about their financing policy.

• If you are allowed to finance your purchase, get pre-approved for a mortgage. When you go to a bank, they will assess the likely value of the property, inform you of the max bid you could make, give you estimated closing costs, and determine your eligibility. If qualified, the bank will promise to finance your purchase if it goes through.
• If you cannot finance your possible purchase, you will need to gather the cash required to complete the purchase at the time of the auction.
• Regardless of your financing options, most auction houses will require a down payment on the land when you bid for it. For this reason, be sure you have enough funds to cover the down payment before you ever go to the auction.

Get title insurance. Different types of auction sales will convey different types of deeds. Usually, in force tax sales or foreclosures, the auction house will convey a quit-claim deed when you purchase the land. In other words, the individual or government only promises to transfer to you whatever ownership interest they have, if any. If the property comes with liens or other encumbrances, you will be responsible for disposing of them.

• If you will be conveyed a quit-claim deed, you need to purchase title insurance if you can.^[6] Title insurance will protect you against unforeseen problems that may arise after you purchase the land.
• In at-will sales, an auction house and seller may convey a general warranty deed. With this type of deed, the seller is guaranteeing against future problems and is insuring you against against other issues.^[7] If the seller is conveying this type of deed, you may not have to purchase title insurance.