Foreclosure auctions are gaining in popularity, especially in these tough economic times. As the foreclosure epidemic spreads far and wide, so do the sheer number of auctions. Real estate experts such as Dean Graziosi know in the ins and outs of buying real estate at auctions and they are highly successful. Here are some tips that may help you do the same.
Perhaps the most important thing you can do is be prepared. It is imperative that you get your affairs in order before you even step foot in the door. Most of the great deals to be had will require a lot of cash. So, if you don’t have access to the cash yourself, make sure your partner is able and willing to furnish the funds. You should also check with the sheriff, trustee or attorney to find out how much you will have to secure should you win a particular auction. It is normally 10% but can vary, so be prepared. Moreover, make sure that you do your research on the properties before you go in, as your bid is binding. There is no substitute for practicing due diligence. It is best for beginners to choose a neighborhood or two, do the necessary research and then bid only on those areas.
You should also know that a vast majority of the real estate up for auction will have very little equity, so choose your properties carefully. The properties that do have significant equity will have a lot of competition. You should also make sure that the properties you bid on are in line with your objective (rent, flip etc). Keep the following question in mind when you bid. If I had to sell the property quickly, would I be able to do so for this price?
It is smart to always assume a property needs fixing up. You should always drive by a potential property prior to the auction. The chances of getting inside however, are slim. If a property appears vacant, take a look around. If there is someone living in the home, you can at least assume the basics are in acceptable condition. The rule of thumb is the less you know, the more you should assume you will need to do to the property.
Beginning investors should also make sure that they set their limits before going into the auction. It is very easy to get emotionally caught up in a bidding war, but it has the potential for disaster. Have the prices you are willing to pay already set and do not change it.