As we have written about not long ago, there are many ways to buy a house at auction. What are the first things to do after you buy a house at auction?
When a homeowner fails to make the payments on the amount they borrowed, the Deed of Trust permits the lender to auction off the home in order to recover as much of its loan as possible. In the Deed of Trust, the lender appoints trustees who can sell the home at auction if the payments aren’t made.
If you are the winning bidder at auction, here’s what happens next:
- Get the deed. Once the full payment is made, the deed of sale will be initiated. Once the deed of sale is recorded in the local land records office, you will get the house in whatever shape it is in. You also “inherit” whatever outstanding taxes or liens may be owed on it. You should receive the deed within two weeks of the sale.
- Your auction house may still be occupied. You should have already found out prior to auction if the tenants of the property were the previous owners or renters. Negotiate with the current occupants to vacate. You may need to send them a legal document indicating that you have taken possession of the house. They may not be happy about having to move. Be cautious about approaching them on your own. You can suggest a cash for keys move out. Or depending on your state laws, you may need to file an eviction. You may want to discuss the occupancy with your legal team and find out the best way to approach the situation, especially if the tenants are uncooperative. We have found that general human decency and compassion for the situation goes a long way in these situations..
- Once the house is unoccupied, change the locks and install a lockbox.
- Transfer utilities to your name. Check that everything is functioning properly. Check for broken water lines, broken air conditioning, functioning toilet, etc.
- Oftentimes, people buy auction properties after seeing only the outside of the home. If you haven’t been inside much before now, compare the reality of the situation with your remodel plan. It may be better or worse than you predicted.
- Put in your order for a dumpster or pick up of any usable items that may still be there. Charitable organizations such as Saint Vincent de Paul are usually willing to pick up furniture that is still in good shape.
- Consider putting a for sale sign in the yard. Even if the home is not near being remodel-ready, letting the neighborhood know it is for sale could attract an as-is investor buyer to sell for a quick and easy profit or drum up anticipation for the completed project.
Gorilla Capital is looking for experienced fix and flip operators nationwide. If you qualify, we will fund 90 percent of the purchase, rehab and management costs, then split the profits with you at the time of sale. Check out our Fix & Flip Calculator to find out how a typical arrangement with us works.