Good morning BP members. I am new to BP and have been reading a LOT of really great posts, articles and books. I have bought and sold three rental properties as well as two personal homes over the past 15 years. I have always used conventional funding (aka mortgage). Through the forums and books, I have learned a little bit about purchasing a home via auctions" and am interested in learning more about the auction process. There are auctions coming up at the beginning of August in my area (North Texas/DFW) and there are 1-2 homes that I would be interested in acquiring and holding using the BRRRR method. Purchasing homes here in almost any other fashion is cost prohibitive as the market is over inflated. My limited knowledge of auctions is that they are primarily a way for the bank to take back the house and that homeowners and investors rarely purchase the house. I also know I cannot view the inside of the property to determine additional costs for rehab. This is fine as I am not afraid of a house that needs major work.
Here are some of the questions that I have thought about and am sure there are several others I don't know to ask.
As a first time auction attendee, what words of advice/caution do you have? What is the best way to determine a price to pay for the home (several have minimum bid requirements)? What other information should I look up on the homes and where would I find such information? What should I be aware of during the auction process (online and in person)? I would not be able to attend the actual auction but, can do it online while at my day job. Should I have a realtor go to the auction for me as a proxy (pros/cons)?
Any other suggestions/comments would be greatly appreciated. Thank you, in advance, for your support.
Hi @Valerie Watson and welcome to BP!
My advice is simple, attend but don't buy. Meet people, network, ask questions. I've found most people who attend enjoy some good conversation while they're waiting around to bid on properties. While it may seem that buying from auction is an easy win, unless you're a professional and can tolerate the risk associated with buying at auction, it's a bad idea. Most of the minimum bids are far too high. I've seen homes that were completely gutted inside, liens pop up at the last minute, and 'vacant' properties that still had an unwilling to move owner. You'd be surprised how much damage an unscrupulous person can do before being evicted. So
On a side note, there are still deals to be had in the DFW area, but you have to look for them. The days of doing a random search on the MLS and buying a dozen properties have passed. At least, until the downturn :)
Thank you for the immediate and sound advice. I think for this round, I'll watch and learn. In the meantime, I'll do all the due diligence on the properties I'm interested in and will watch what happens to them during the process.
Just a quick update. I learned another "lesson" by watching the Foreclosure Auction list - all three of the houses I was interested in (The Colony, Little Elm and Lewisville) were "removed" or "cancelled" from the auction. It is a little disappointing as I was hoping to watch them be bought and then would follow to see the rehab and rental. Alternatively, I can't help but be a little hopeful that 3 families saved their homes. :) I did quite a bit of research on each property and any one of them would have been a good BRRRR according to the "numbers." So, the lesson I learned is to keep looking and to broaden my search as it truly is a numbers game. Let's just hope I don't have to go through 100 to get 1. Thank you all for the support, advice and help. This is starting off to be a great adventure.
Have a title search done unless your are Very confident you know how to do it yourself(do you know how to find a mtg/lien that was recorded with a misspelled last name?)
Obviously you want to bid on First Mg foreclosures.
I don’t know if you can have “unrecorded” liens (code violations, utilities, etc) there, or not.
Do hoa debts carry over to you there?
There are usually current/past due property taxes which you will inherit.