buying a property at auction

2 Replies

if you had a customer or if you were buying a property at auction...what would be the first thing you would want to know? 

Originally posted by @Myers Jackson :

if you had a customer or if you were buying a property at auction...what would be the first thing you would want to know? 

Assuming the property needs some rehab the first thing I would want to know is the ARV.

WOW!  There is alot to know before going to auction.  There are also different types of auctions.  So I will just speak to trustee sales (foreclosures sold at the steps of the courthouse or trustee's office).

For starters, you need to know that you are actually bidding on the 1st lien holder, so that you are awarded the property, and not a jr lien holder's debt against the property.

Of course Comps to know what to bid.

Do a drive-by.  You can't go in or disturb the occupants (unless the property is actually listed for sale).  Make sure the structure is actually there, and observe as much as you can from the street.

Put together a budget for rehab.  I usually do 2; a light remodel and a full gut.  Build in a contingency budget for unexpected items.

Confirm money.  Confirm money.  Confirm money.  There is a bidding deposit due the day of the auction, which is usually $10K in certified funds.  Then the balance is due within 24 hours of winning bid.  So, as an agent assisting a client, I would make sure they understand that this is not a normal sale where they get 30 days to close and can obtain a mortgage.  There ARE hard money lenders that can provide loans within that quick turnaround, but if you are using one of them, you need to have that lined up ahead of time.

You have to know how to take title.  

You have to know what the process is in your state for evicting anyone living in the property if they don't vacate after the sale is complete.

Just to name a few things...... :)

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here