I went with an investor client yesterday to the auction house to buy a property. If you’re considering buying properties at auction, here are some key takeaways for you.
#1) Research, research, research. The property my client wanted ended up being saved and came off the auction block. He was prepared though. He brought all the paperwork needed, his checks were ready, he was mentally open to buy.. However, there was NO way he was going to bid on the properties that were coming up, good deal or not, and there was NO way I would advise him to do so.
Before stepping foot into an auction house, know the EXACT property you want and find out everything you can about it. Speak to real estate attorneys, enlist the help of an agent, do your research on the property. Find out about the title, taxes, occupancy, location, eviction laws, neighborhood, layout, old listings that may clue you in on what it looks like inside, etc.
#2) Be prepared. As with most things, being prepared will only help you. Register first online to save time. Call before the auction begins and before you leave your house to see if it they can tell you if the property you want is still available. Bring your photo ID, any required paperwork (bank statements, pay stubs, etc), your checks in incremental amounts, and an iPad or laptop for on-the-fly research. Most importantly get plenty of rest the night before, eat well in the morning, and leave early enough to arrive on time and get settled in. It may be a long day.
#3) Select several properties to bid on. My client wanted a specific house and it had a good opening bid amount. He was hoping to win it. He knew what neighborhood it was in and had even driven past the house. He did all his research, it was going to be a good buy. Fortunately for the homeowners, but unfortunately for my client, the property came off the block and he had no more to bid on. We watched as other properties came and went, but knew that was all we would do.
We are going again next week, but this time, my client is opening up his selected areas and choosing a handful of properties that he would really like to bid on. This will ensure that he has a chance to walk away with something. And if he doesn’t, like I always say to my clients, he will get the property he’s meant to have, and we will go again.
#4) Know what you are bidding on. When you are at a property auction, it is very important to understand that you are not bidding on the property itself, but on the outstanding loan amount on the house. This is why I say to research heavily. Yes, there is a property in front of your eyes, but what you are bidding on is the debt amount plus fees on that property. There may also be additional liens on the house that will preclude you from obtaining clear title.
Know the facts on the property, enlist help from agents and attorneys, and best wishes on your real estate investment adventure!
Feel free to call or write me with any questions. Best, –Vanessa 🙂