Real Estate Auctions - What newbies need to know

[Jennifer DeRosa]

Hi! I just joined the forum and looking to expand my knowledge in the real estate investment world. I have been exploring an auction happening in upstate New York (sullivan county) and am considering bidding on the property that is rural land. I did due diligence on the property (looked up outstanding liens, tax zoning, and reviewed the deed etc) but is there anything else I should consider before bidding? Should I avoid this type of auction in general when looking for deals? Does the bank usually come in and buy the property back at a higher than anticipated price? Anything and all advice surrounding real estate auctions is helpful and appreciated! 

Overall, I'm looking at the cheapest way to buy property with little debt financing and low overall capital down so figured auctions could be a good place to start. 

[Eliott Elias]

There are usually not great deals to be found. All these deals have been fished by investors and wholesalers blowing up their phone trying to work a deal. By the time it hits the auction table the deals washed 

[Gurbeer Sangha]

You have done the proper due diligence, so you are good on that end. I work on foreclosure auctions in California and I have gotten some fantastic deals.

The biggest thing is have a very, very firm upper limit. Once bidding, it is easy to get carried away in the moment and end up paying too much. You need to have the chest to stop bidding once you hit your price cap.

Good luck! 

[Nathan Gesner]

I will add that even after you win the auction, there is a redemption period where they can pay you off (plus interest) and take the property back. In my market it's 90 days for the owner and 30 days for the lender, 120 days total. If nobody redeems it, then I get the deed and take possession.

[Jennifer DeRosa]

Thanks everyone!