Get the most out of auctions

The first and most important part of buying at auction is the property’s as-is condition. Houses on the auction block are sold without guarantees as to their quality. Often, this can spell disaster for the investor who doesn’t do their homework and hasn’t yet looked into the property’s structure, landscaping, or tax lien status. Remember that no one is going to fix your property for you, so you are responsible for all the possible problems.

Next, you’ll want to do as much research into the property that you can. You’ll want to find out the current status of the title and if there are additional liens against the property, all of which can be found out in a title report delivered by a title company. You’ll want to find out about any possible structural problems with the property. Auctioned properties are notorious for containing a myriad of structural problems. At the very least, walk up to the property and inspect from the outside. If there are current occupants, they might or might not let you inside to look around, which is one of the hazards of the business.

Now you have to crunch the numbers. The starting bid for a property at auction is generally equal to the remaining balance on the mortgage. If you know the starting bid for the property, you can use that as a starting point. First, is the house worth buying at this price? After all, you can’t negotiate with the auctioneer for a lower price at this point, so you’ll have to work with the numbers given to you. Some of these properties won’t be purchased for the starting bid and will become bank-owned properties.

Consider the price of possible repairs, tax liens, closing costs, and other expenses you will incur by purchasing the property. Can you make a reasonable bid on this property and still make a profit?

First, in order to find properties up for auction, you’ll need to do a little legwork. You can go to your local county courthouse where they post auction notices.

Now that you know all the important details about the property, you can begin the purchasing process. As we’ve already mentioned, the auction process goes by very quickly, so you’ll need to secure financing before you place your bid. If you don’t, you can lose your deposit, an unfortunate lesson for anyone.

Immediately after the auction, the county will require you to place a deposit on the property. This amount varies depending on the county, and you can find out how much you’ll need to pay by making a few phone calls to county government offices.

Some of these auctions are silent, meaning that each of the prospective buyers will list their highest bid on a piece of paper, and the highest bidder gets the property. Some are more traditional with an auctioneer yelling out bids. If you’re interested in purchasing at auction in the future, you should probably go visit a few of these auctions first to see what they’re like.