Foreclosure auctions are fast with an average speed of 25 sold per hour. They're an efficient and effective way to buy and sell real estate. Sellers are motivated because they get the highest current market price
in the quickest time. It helps to keep long term holding costs to a
minimum. Plus the property is exposed to a large group of buyers who
are pre qualified and ready to buy.
And Investors love buying at auctions because You decide the price and there's no confrontation with the seller. All lengthy negotiations are eliminated, the faint of heart are put at ease. No wasted time wondering if your offer was accepted. In most cases, get free and clear title and close within 30 days. It's fun, exciting, and action packed.
Properties at auction are Hud foreclosures, from the government, bank owned properties from mortgage companies and tax foreclosures from state and local government. Investors have the ability to find, evaluate, bid, and buy online. Email alerts can be sent to you when properties meet your criteria. However, most foreclosure auctions with HUD homes for sale will require a Realtor.
Foreclosure auctions aren't only distressed properties,
You can buy all types of investment real estate.
Although the basics
are the same, procedures and conditions differ from state to state.
Private auction companies will differ from the government liquidator
auctions. Review the auction company's sample real estate contract
requirements, terms and conditions, and visit their site.
General basics requirements are a $5,000 cashier check escrow deposit and a buyer's premium fee of between 4%-10% of the amount of the winning bid. Most closings are scheduled within 30 days and with normal closing costs for both seller and buyer. Always remember, its a contingency free contract - close on time or forfeit the escrow funds.
Assignment of contracts are not allowed. However, they can still be done using transactional funding or a simultaneous closing.
Absolute auction: sold to the highest bidder no matter what the price.
Reserve auction: subject to seller's approval.
Sealed Bid Auction: offer is submitted in writing and in a sealed envelope. This type of auction is usually best if the property doesn't have a large audience of buyers. Like high end luxury homes, large rural properties, and apartment communities.
Don't shy away from the smaller auctions because you can find great deals there too. Usually, the properties are less advertised which means less competition. Also towards the end of all auctions, properties start to go cheaper because many buyers have already spent their available funds.
Prior To The Big Day Inspect The Property.
check for code violations and hidden problems
All properties are sold in as- is-condition. Yes, take your contractor. View all property descriptions, maps, surveys, and tax data. Check comparable sales and determine your max bid amount. Complete your due diligence and bid with confidence. Predetermining your max bid amount before the auction will keep you from getting caught up in the excitement and over bidding.
PRO TIP: Sometimes the property will convey with liens attached. Hedge your bet and invest smart, have an attorney or title company run a title check on the properties you plan to bid on. Or you can do it yourself, we suggest using a VA to collect the data, with free online public records.
Secure financing using OPM - other people's money. And many auction companies have special financing programs or a special lender they like to work with. But private money or hard money may be a better alternative based on your exit strategy.
On the day of the auction register at least 48 hours in advance and arrive early with a photo id to get your bidder card- its free. The real estate auction will begin with opening announcements, changes, and disclosures. Be present at this time and understand the auction company's procedures. This is definitely the time to ask those last minute questions.
Don't be intimidated by the fast and furious pace, the auction staff will be there to assist you. When the bidding starts- to make a bid make eye contact with the auctioneer, or gently wave your bidder's card, or signal any of the staff, they'll indicate to the auctioneer that you're bidding.
Get to know the real estate auction staff. That way, you can easily be notified in case some of the other properties don't close. Always tell them you are willing to be a back-up buyer.
Before the big day to eliminate anxiety. It's easy to check out online auctions. They're immediately updated and
you can review the process and live auctions with a click. And they'll
have videos of previous auctions.
However we suggest physically attending a few local auctions. Get your feet wet. You'll gain first hand knowledge and you'll experience the pace and excitement without the pressure of bidding. Plus they're are entertaining :)
But what we like best of all when we physically attend foreclosure auctions is the opportunity to meet and connect with other investors. Its always interesting to see which types of properties go to which investors.
Foreclosure auctions are addictive. Once that gavel goes down and the auctioneer says, "SOLD" and points to you, smile because you've just bought investment property at a foreclosure sale.