Purchasing a foreclosed property from an online auction is getting increasingly popular on Kauai. It is a new way that banks who have foreclosed on homes are marketing and selling their repossessed properties. Similar to E-bay the property is listed on their website with an auction date and time where anyone can sign up online to bid. All bids are visible from the auction website. Most of the time these properties are listed on the Multiple Listing System (MLS) and sometimes are not being advertised publicly as an online auction.

Reasons why banks will send certain properties to an online auction:

• The property is occupied.
• The property is in tear down condition / non-financeable condition.
• The foreclosure bank has a quota to send X amount of properties to the auction company.

I have seen a couple properties sent to auction that were not in tear down condition. Like this condominium unit at Halelani Village in Lihue. This unit was fully in tact and livable that could use some cosmetic updates. This condo was sold via Hubzu.com. They display all of their auctioning directions on their website.

This Halelani Village downstairs unit sold for $227,064 on 6/23/17.

This blog is mainly pertaining to Hubzu.com online auctions. Before purchasing a foreclosed property from an online auction here are some quick tips.

Online Bidding Tips:

1.  The banks like a quick close – 30-45 days tops. In this case cash is best because you wont have to wait for an appraisal or a lender that will be quick. The foreclosure banks will not wait around for a 90 day rehab loan.
2. Before bidding check what type of funds they are accepting – Some auctions will only take cash, some will accept certain types of financing.
3. No inspection contingency – These properties are purchased AS-IS and the banks will not agree to pay for any repair requests. They also will not pay for any surveying/staking or pest control. Buyers can get this done at their cost.
4. If the home is occupied, depending on the occupants the buyer most likely cannot get a loan if the occupants dont allow the appraiser to go inside. If the buyers are purchasing with cash they will be responsible for getting the occupants out of the property. I havent seen Hubzu have any occupied properties, I have seen some occupied homes for sale on Auction.com.
5. Online purchase contract – A state of Hawaii purchase contract will not be used. Read their contract carefully.
6. Buyers premiums fee – Along with the bidding price the buyers are charged a buyers premium fee of about 4.5% or the purchase price (may vary). Buyer will still have to pay this fee whether or not they enter in their Realtor. Please enter in your agents name and info if they have shown you the property! 
7. The listing agent for Hubzu H. Scott Rotheiser is not on Kauai, I’ve heard he the companies nation wide listing agent. Contact an on island agent for showing requests.
8.  Bids will be displayed publicly once the auction starts.
9. Everyone will bid in the last couple of minutes, once someone bids at the last minute the auction extends another 15 minutes.
10. Making an account may require giving Hubzu your social security number.
11. They require an earnest deposit if you win the auction. Try to not default and back out of the auction. Per their contract they may have the right to keep your earnest money depending on the reason why the buyer cannot go through with closing the sale.
12. Hubzu’s closings agents are very strict on deadlines, to the point of impatient. Be sure to sign and meet all obligations promptly, they will threaten to cancel the transaction if the buyer is in default.
13. Last tip – Have a number in mind before bidding of how high you are willing to bid. This way you wont get caught up in winning the auction and will just bid up to how high you can realistically afford to bid.

BEFORE

AFTER

Purchasing a home on Kauai from an online auction can be “scary” for a first time home buyer. In my opinion it is best and less stressful purchasing these properties with cash.

My Mom and I purchased a property via Hubzu earlier this year in January 2017 for $284,539. More details on this project of ours to come soon! Here is a sneak peak of the before and after. This home is on the west side of Kauai and is 3 bedrooms 1 bath with a studio of 2 rooms and 1 bath. It has a land area of approx. 10,000 sq. ft. and another home can be built in the back.