Thinking About Buying a Home at Auction but Need Financing? Here’s What You Need to Know

Auctions

Jun 19

Buying real estate at auction in Tennessee is fast-paced, transparent, and often a great opportunity to secure a deal. But one of the most common questions buyers ask is:

“Can I use a mortgage to buy a house at auction?”

The short answer is yes — but only if you are fully prepared. Below, we’ll break down how financing works in a real estate auction and the steps you need to take before auction day.

Yes, You Can Use a Loan — But Timing Is Everything

Most real estate auctions in Tennessee follow strict terms:

10% deposit due on the day of the auction
Remaining balance due within 30 days
No contingencies (including financing or inspections)

This means you cannot win an auction and then start applying for a mortgage afterward. To use financing successfully, you must already have:

Pre-approval from your lender
A lender who can close within 30 days
Confidence the property will appraise and qualify

Important: If your loan falls through after the auction, you could lose your deposit and potentially face legal consequences.

Talk to a Lender Before You Register

Before raising your hand at a live auction — or clicking “bid” online — talk to a lender who understands the unique requirements of real estate auctions. Many traditional mortgage lenders operate on 45–60 day closings, which is too slow for most auction contracts.

Questions to ask your lender:

Can you close in 30 days or less?
Does the property type or condition affect approval?
What documents do I need to provide upfront?

Financing options to explore:

Bridge loans
Cash-out refinancing
Hard money loans (for investors who need quick access to funds)
Conventional 20% down loan from a local or regional bank or credit union

Be Ready to Pay the Deposit Upfront

Every auction requires a non-refundable deposit, typically 10% of the final bid, paid on the day of the sale. In Tennessee, this is usually paid immediately after the auction by:

Personal check
Certified funds
Wire transfer

Your lender will not cover this deposit. You must have cash reserves available to cover it on auction day.

What If You’re a Cash Buyer?

Cash buyers hold a strong advantage in auctions. With no financing delays, they can close quickly and confidently. Most cash buyers come prepared with:

Bank statements or proof of funds
No lender requirements or appraisals
The ability to stand out against financed buyers

Quick Reference: Can You Use a Loan at Auction?

Yes, but financing must be secured in advance.

Final Tip: Do the Financing Work Upfront

If you are serious about buying property at auction in Tennessee — whether in Nashville, Franklin, Lebanon, or anywhere across Middle Tennessee — the key is preparation.