A lot of people talk about buying real estate for a steal at foreclosure auctions, and most of them have never actually done it. From someone who actually has, here are a few tips.
Tip Number 1: observe a few auctions before bidding. On the most basic level, you’ll need to understand the procedures; showing proof of funds for deposit, understanding what they're talking about in the legal description, etc. Beyond all that, though, there’s a rhythm to auctions, and you need to get a feel for it.
Tip Number 2: Be prepared. Would you go bid on a Baroque period armoire without knowing when the Baroque period was (or worse, what the hell an armoire is)? Likewise, do some research on the house and the neighborhood. When was the home built? How many square feet does it have? How many beds and baths? Has it been renovated recently? What kind of work does it need? What are the local comps selling for? And the list goes on, but the bottom line is: what is the thing worth right now?
If you know what it's worth, you can decide what you’re willing to pay for it. Which brings us to...
Tip Number 3: Always know beforehand what you’re willing to bid, and stick to it. It sounds easy, but you'll be tempted to bid more when you're actually there, and it'll cost you money.
Tip Number 4: Have your loan lined up beforehand. Whether it's a hard money lender or a local bank, establish a close relationship and earn their trust. Make sure they can move QUICKLY, because you'll have to settle within a short window of time.
Tip Number 5: Keep your competition close. There aren't a lot of people who are serious about picking up real estate at auction,which means you’ll see the same faces again and again, so play nice with the other kids in the sandbox. Have a pizza with them, buy them a beer, get to know them. Find out who they borrow from, who their realtors are, what neighborhoods they’re investing in, etc.<!-- Kontera ContentLink(TM);--> <!-- Kontera ContentLink(TM) -->