Buying an auction property

8 Replies

Looking for advice. In my neighborhood a condo going into auction on auction.com. I want to grab it as an investment prop. Would you hire a title company to do initial search or go to court house? Because if I win I can hire the title company for title insurance, or do I have to hire them for initial search to be eligible to get insurance through them? Anyone have any contacts for real estate attorneys in south jersey?

I'll message you info since I can't put phone numbers here. 

Originally posted by @Michael P. :
Looking for advice. In my neighborhood a condo going into auction on auction.com. I want to grab it as an investment prop. Would you hire a title company to do initial search or go to court house?

Because if I win I can hire the title company for title insurance, or do I have to hire them for initial search to be eligible to get insurance through them?

Anyone have any contacts for real estate attorneys in south jersey?

 Auctions do not have a due diligence period. So if you win the auction you're stuck with whatever you get. Therefore it is strongly encouraged to make sure you do the title search and, as best as you legally can, inspect the property so that you can make some assumptions about its condition before placing your bid. 

Best of luck!

@James Masotti
Are you familiar with Auction.com sales? Is it a foreclosure? Can there be an owner still living in the residence if its been been foreclosed? 

Originally posted by @Michael P. :

@James Masotti
Are you familiar with Auction.com sales? Is it a foreclosure? Can there be an owner still living in the residence if its been been foreclosed? 

Only somewhat familiar with them. I believe that almost all, if not all, of the sales on Auction.com are foreclosures. Once the bank takes possession of them after sheriff sale, they may prefer to use the auction as a stalking horse for where to list the property on the MLS. If they're able to sell at their desired price than that's gravy. Most foreclosures would be vacant, especially once the bank completes the foreclosure proceedings and takes possession of the property. However that having been said it's possible there are still squatters in the house, and you can't just barge in on them, they would more than likely need to be evicted.

@Michael P. James is right! Definitely do your due diligence/title before the auction so you go prepared. Also, the site will tell you what type of property the condo is that you are referring to. They do both pre-foreclosure sales (typically on the courthouse steps) and bank owned sales (typically online auctions). Hope it goes well! 

On auction.com the auctions can be foreclosures, or bank owed. For example the bank owed property I am looking at still is occupied. The bank just never went through the eviction process. Now from some of the things i read that could be because they do not want to deal with HOA related costs that could be past due, even if its 1k.

@Michael P. I've looked at a few properties on the auction sites and it seems like a totally annoying and frustrating process. The others are right about title and squatters etc..., but just getting the winning bid is super difficult. There is a ton of competition and the auction site usually sets a reserve price. If the winning bid doesn't reach the reserve price then they'll start the whole process over again. They can go through the auction many times and have incremental price reductions before it finally sells at a price that the bank is willing to accept.

Example: Take a look at 411 Lore Ave

https://www.auction.com/details/411-lore-ave-wilmi...

I've been watching this property on Auction.com for probably 2 years and it is still there. The price has been reduced but not by a lot. Also, I've driven by and it is definitely being lived in. The place probably needs 200k worth of work if renovated and the ARV would then be maybe 400k. Makes sense if you want to be an owner occupant, but not for an investor.

So, maybe the auction sites work for some, but personally I'd rather use other methods to find properties.

Jack Clough, Real Estate Agent in PA (#rs-330591) and DE (#rs-0022836)

@Michael P. - Auction.com sells foreclosures (in person).  Yes, the owner could still be living there so you will either have to do cash for keys or evict (we've had to do both).  Not sure what the NJ eviction laws are but you might want to check on that too.

Also in my experience less than half of the properties listed on the auction.com website ever come to auction.  They either get pulled the day of or postponed.  Also as @Jack Clough  alluded to, the Auction.com opening bid is usually just a tease unless it is an exact number.  For example if the list the opening bid as $50,000 it 99.9% not true but if it is $54,302 it is truly the opening bid.  They are notorious for sending out teaser bids when the actual reserve is significantly higher.

We did all our own title searches - just got to be too expensive with all the houses coming to auction.  You may want to talk with a local title company and see what they tell you regarding title searches and insurance.  I'm not familiar enough to give you any insight on that.

Best of luck! Please report back how it turns out!

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