1. Speed is Critical
There are usually tighter closing timelines on Auction properties, sometimes in as little as two weeks following bid acceptance. Traditional bank loans, with lengthy approval processes and extensive documentation, and even Non-QM financing can take too long. Hard money loans, like those from EquityMax, are designed to provide near immediate access to funds—giving you the agility needed to secure the property well in advance of the closing deadline.
2. Property Condition Isn’t a Barrier
Traditional financing options generally seek properties in pristine or livable condition. Properties that come under auction bidding protocol are usually real estate that were abandoned by the previous owner, and left in poor conditions. These are almost always REOs owned by an out-of-town institutional investor who does not maintain the property on a day-to-day basis. Many auction properties come with “as-is” conditions or may need significant repairs, making them difficult to finance through conventional lenders. Hard money lenders focus on the value of the property and its potential, rather than its current state or even the borrower’s credit. This makes private money loans the perfect solution for properties that need rehabbing or fall outside the criteria of traditional financing.
3. No Interior Inspection
Most financing avenues, even hard money, now require an appraisal. However, nearly all auction properties do not allow interior access prior to bidding. This can prove to be a detriment if utilizing a lender that will require viewing the inside of the property. EquityMax, unlike other competitor lenders, does not require an interior inspection on auction properties. We will simply do a “drive by” inspection/BPO, which will be sufficient enough to make an underwriting decision.
4. Code Violation or Title Issues
Auction Properties usually come within the territory where a buyer has to assume any and all existing code violations, including those that may lead to title issues after closing. Traditional financing sources, and even several hard money options, will not entertain loans that have issues that are impeding, or could impede, title. Stick with EquityMax as an option that will finance a property, even with existing code violations.
Hard money loans often require much less paperwork than traditional loans. When you’re facing tight auction deadlines, the last thing you need is to be bogged down by excessive documentation requests. EquityMax simplifies the process by focusing primarily on the asset itself, making it faster and easier for you to get the capital you need.
5. Occupants are in the Property
Most lenders will not finance a property if an occupant, hostile or not, is occupying a property prior to closing. This could be the past owner, or even a squatter. Often times, lenders do not want to finance a property that may not cash flow immediately, or where the ability to repair the home may be delayed because of the task of evicting the current tenant or resident. EquityMax does not look at occupancy as a deterring factor in whether or not we will finance a property on the auction block.
