Planning To Participate In First Auction - Any Tips?

Question

I am planning to participate in my first auction coming up in the next week. It's on auction.com and I've done some recon work with driving by the property and investigating it from an exterior standpoint. Looks like a good buy. I am not able to get into the property as it is currently occupied.

Any tips or further due diligence I can do before the auction? Anything I need to know about auction.com as a first time bidder? Should I be going to the courthouse to see if I can find anything further about the property?

Any info provided will be greatly appreciated! Thanks!

Chris Simmons · Answer

Since you are new, I recommend getting help.  Contact a Realtor to help you determine comps in the area so you know what this thing could be worth.  Then, try to determine a budget yourself or bring out the big trades to see what pricing they might be willing to give you, if any....since you likely don't have interior access.

Based on the above results, determine your level of interest in the property.  If opening bid is $20,000 and you have little more than that, I would not spend much money.  But, if you can see yourself really competing against other bidders for this property.....and you are confident this property is worth it, then contact a title company for a quick title check.  You can potentially find things yourself but can easily miss things too.....big risk.  A few hundred dollars to make sure you don't have any surprises waiting for you is a small price to pay.  Also....depending on your risk tolerance and knowledge in the area....buy an hour of time with an attorney...might even be the attorney that researched the title for you....or at least issues his opinion about what his title clerks found.  The relevant info he can provide relates to the liens that are on the property and will remain after you buy it.  He can also advise as to the type of title you will get as a result of this auction etc.  Buying it at auction and finding out there are still liens attached that were not wiped off could be a budget buster.   I just bought a fire damaged unit with back taxes due and liens from the city resulting from the fire and owners failure to maintain/rehab the property afterwards.  While there were over $8,000 in liens, I found out that almost $7,000 were directly against the owner, not the property.  They were tied to the property only as an abundance of caution for any future owner or lender to make sure they were aware of the fire.  So fortunately, I was not required to pay those liens at closing.  The seller still owes those to the city herself and the liens will get removed after I rehab the property....assuming i work with the city and pull the necessary permits.

Just do your research, operate within your risk tolerance and understand the bidding rules....having to register, proof of funds required, initial deposit to bit, days to close, recourse against them and seller, consequences of not closing etc.

Good luck