Saving Money With Smart Foreclosure Auction Bidding
How do people actually turn a profit in the real estate business? Many investors who turn a profit from real estate are buying property from foreclosure auctions. Much like investing in the stock market, you need to buy low and sell high to make the real estate business work for you. Buying from a foreclosure auction is a way to get the low buy in rate, but you have to use caution and know what you are doing.
Know Your Market
There are services easily accessible which show foreclosure auctions happening in every state, but it is a mistake to blindly buy property in a market you aren’t familiar with. For example, a devastated area in Florida where the homes have been wiped out by a hurricane will not be a good market to invest in, but you may not know about this problem if you go on limited information from these services. It is best to stick with foreclosure auctions that are in specific locations that you are familiar with.
Bidding Procedures
It is perfectly okay to contact the owner of the property to try and make a deal so the property doesn’t go on the foreclosure auction block. In general, there will be about a month where the homeowner is free to find a buyer. Most lenders appreciate these sells as they are preferable to auctions.
You can still bid at the auction if you can’t get a deal with the homeowner beforehand. If you really want to make a bid on a property it’s your job to find the realtor who is holding the auction and determine if they will allow you to call in a bid or if you must show up in person.
Do not expect the current homeowner to open up with the details of the property. It is essential that you first acquaint yourself with the state laws for foreclosure auctions in the state you will be bidding, since they are different in every state.
Deciding How Much to Bid
As a general rule, a good bid is approximately 20% of the estimated market value for the property you are bidding on. Estimated market values are listedin valuation reports which are public record. However, it is urged that you not only inspect the property yourself, but hire your own home inspector to give it a once-over. Bargains at a foreclosure auction are great, but it can quickly turn into a nightmare if there are serious issues that will be expensive to fix.
Depending on the foreclosure laws in the state where the auction is taking place, you may have to pay for the property in full. You must take this into consideration when putting in your bid.
