There are many different ways to purchase an investment property. MLS, FSBO, auction, short sale, wholesaler, and estate sale are some options. And there are sub-categories of each. Today we explore different ways you can buy a foreclosed house at auction.
How Do You Buy a Foreclosed House?
People in the business talk about buying foreclosed homes because that is often where you can get the best deals. Auction homes can be all over the spectrum as far as the shape they are in. Some may be in great shape, but the owners couldn’t keep up the payments and lost them. Some may have been vacant for years, falling into disrepair and unfinanceable conditions.
There are different types of places to buy foreclosed houses through auctions: trustee, judicial, and online. A foreclosure auction can be a large event where dozens of properties from a large geographic region will be sold. Auctions are typically held by county and may all take place on the same day. In Texas and Georgia, it’s the first Tuesday of the month. Publication requirements vary by auction type and state. A local newspaper usually prints judicial and trustee auction announcements in the legal announcement section. Look out for auction postponement announcements.
If you want to try buying a home through an auction, attend a couple to get a feel for what you are walking in to. These can be very large events with a lot of theatrics. It is easy to get swept up into the excitement of acquiring something. You may not make your best decisions under the auction pressure of trying to beat someone else to the deal.
Some auctions require that you have a certain amount of the winning bid, such as 10%, readily available in case you are the winner. Sometimes, the balance of the deal is due at the completion of the bidding. Some auction houses have a reserve amount that needs to be met. You could win the auction but not meet the reserve. In this case, winning the auction means you won the right to meet the reserve if you choose to do so, or decline.
Buy Auction Properties With Care
With auctions properties, you aren’t allowed inside the home before you make a bid. This means there is some risk to the purchase. If you are buying in your local area, you may be able to drive buy an address and observe it. The outside condition of the home and property allows you to make some assumptions on what will need fixed inside. When in doubt, err on the side of caution. Make sure your bid amount still leaves some profit in the deal when it’s all said and done!