A foreclosure auction is a unique forum in which to buy a property. Here are some tips for getting the best possible deal at a foreclosure auction.
Tip #1: Do your homework
Before attending the auction, it's crucial to do your homework. When you bid on a foreclosure property at a public auction, you cannot retract your bid. Therefore, do as much research as you can on the properties being offered at the auction. Ideally, focus only on one property, or just a small number of properties, so that you have some idea of their market value before bidding on them.
Tip #2: Inspect the property or properties
It's highly unlikely that you'll be able to inspect a property being auctioned. The home owner is hardly going to be agreeable to a bunch of people assessing their home, which they are being forced out of. However, you have nothing to lose by asking for an inspection. If it's not possible, be sure to drive to the property and assess it to the extent you can. The less you can find out about the property, the more you should assume the worst! In other words, assume that the property needs significant repairs and improvements, and budget accordingly.
Tip #3: Identify any liens, liabilities and unpaid property taxes
It's also imperative to conduct whatever research you can to identify any liens, liabilities and unpaid property taxes attaching to the property. When you buy a foreclosure home, you'll also be accepting such liens, liabilities and taxes. If you're not aware of these before you buy... you could be in for a nasty shock. So too, the existence and extent of these should reduce the value of the home, which you should take into account when bidding. Therefore, perform a title search and any other necessary searches to identify any of these.
Tip #4: Know what to bid
Your strategy for monetizing the foreclosure will affect how much you should bid for it at the auction. In other words, how do you plan to achieve a return on your investment? Will you make cosmetic changes to the property and sell it shortly after buying? Will you rehab it and then rent it out or sell it? Calculate your expected return and determine your maximum bid accordingly. Just be sure to take into account the possibility that the property has more problems than may have appeared at first... and have a Plan B... and C.
Tip #5: Be prepared to pay a deposit
In most cases, you'll need to pay a deposit on a property you buy at auction. This is often 10 percent of the winning bid price and must be paid on the day of the auction in the form of certified funds. In some states you will need to pay the balance of the purchase price on the day of the auction; in other states, you'll have 30 days to pay the balance. Be clear on the rules that apply to the auction in question and make sure you have what you need in terms of a deposit.
Tip #6: Stay rational
A foreclosure auction can be fast-paced and intense. It can be easy to get caught up in a "bidding war". Don't! Stay calm and rational, and stick to your plan. Only bid on the properties you've decided to buy and don't bid any more than the maximum you previously decided to pay.
Besides these tips to help you invest in foreclosures during the auction, you need to educate yourself on knowing what are the best deals. ForeclosuresUnleashed.com can help you with that too so check that out.
No comments:
Post a Comment