Going to my first foreclosure auction tomorrow as an observer – tips? thoughts?

Question

Hey everyone,

I’m planning to attend my first foreclosure auction. I’m not bidding this time. I just want to see how it works in person before I ever put money on the line, and I’d love any advice from people who’ve been doing this a while.

The property: 817 W Edwards Ave, Houghton, MI 49931

• Foreclosure, in-person auction, cash only, no buyer’s premium, opening bid TBD
• 3 bed / 1 bath, ~1,572 sq ft, ~0.24 acre lot
• Listing: https://www.zillow.com/homedetails/817-W-Edwards-Ave-Houghton-MI-49931/106383218_zpid/

Foreclosure, in-person auction, cash only, no buyer’s premium, opening bid TBD

3 bed / 1 bath, ~1,572 sq ft, ~0.24 acre lot

Listing: https://www.zillow.com/homedetails/817-W-Edwards-Ave-Houghton-MI-49931/106383218_zpid/

General auction questions

• As an observer, what should I be paying attention to? How the lender’s opening bid works, who the regulars are, how fast things move?
• Any etiquette I should know? Is it normal to chat with other attendees or ask the person running the sale questions afterward?
• What do experienced bidders do in the days leading up (title search, drive-bys, pulling comps) that I should practice now, even without bidding?
• What rookie mistakes have you seen people make at these?

As an observer, what should I be paying attention to? How the lender’s opening bid works, who the regulars are, how fast things move?

Any etiquette I should know? Is it normal to chat with other attendees or ask the person running the sale questions afterward?

What do experienced bidders do in the days leading up (title search, drive-bys, pulling comps) that I should practice now, even without bidding?

What rookie mistakes have you seen people make at these?

This specific deal

• If you were looking at this one, how would you approach it? Houghton is a college town (Michigan Tech), so I’m curious whether you’d see it as a student/long-term rental, a flip, or something else.
• 3 bed / 1 bath at nearly 1,600 sq ft seems light on bathrooms. Would you budget for adding a second bath?
• How do you estimate rehab when you can’t get inside?

If you were looking at this one, how would you approach it? Houghton is a college town (Michigan Tech), so I’m curious whether you’d see it as a student/long-term rental, a flip, or something else.

3 bed / 1 bath at nearly 1,600 sq ft seems light on bathrooms. Would you budget for adding a second bath?

How do you estimate rehab when you can’t get inside?

Thanks in advance!

Hossein Sharifi · Answer

@Landon Harazin When you can't get inside, assume the worst on everything you can't see. Roof, windows, siding and foundation you can judge from the street. Inside, I'd budget full mechanicals, a full kitchen and bath, and flooring and paint throughout. Get a local contractor's per-foot rate for that scope. If it's $35-50 a foot, that's roughly $55-80K on 1,572 square feet, before any second bath.

Then work backward: ARV, minus rehab, minus about 10% for holding and selling, minus your profit. That's your max bid, and you write it down before the auction so the room doesn't set it. In a Michigan winter, also ask whether the house was winterized. Burst pipes are the classic auction surprise.

Jay Hinrichs · Answer

Not to sound like a complete @$$ when I was really active at the courthouse steps I would have rookies come up and ask me questions all the time since they would observe me win bids and hand over cashiers checks.. However I was not there to Train my competition and give tips and tricks that took me years to learn on my own. So while I did not say get lost.. I did not engage in question and answer.

Also 99% of posted sales never actually go to sale at least in the markets I worked you there might be say 10 or 15 that are going to be sold on any given day or a busy day like a friday And only 2 end up being cried and either revert or sold to 3p. to follow foreclosures other than honing in on one property one has to follow many properties and be ready to bid on all of them you just never know really which ones are going to go.

IN addition cant rely on mortgage amounts many times you can have a drop bid.. say mortgage was 200k and the crier ends up opening the bid at 125k and well everyone thought it was no deal at 200k and the thing reverts to the bank because no one brought a check for it.. I learned that the hard way and always brought checks to cover everything i was remotely interested in.. so I would routinely have 2 to 3 mil in cashiers checks at each auction.. This is the kind of competition folks are up against I was just one guy one company each market has their folks that will dominate the sales generally speaking if there is any money to be made.

JD Martin · Answer

I never talk to anybody at an auction unless I have no interest in bidding. I have no idea who I'm talking to and no idea how anything I say might be useful against me, so I don't say anything. If you can find the court records that show the default amounts, you'll know where it's going to open because the bank wants to be made whole. Often there's little to no equity in the property anyway so there's not going to be any other bidders unless you've got some odd situation like a residential property that can be demolished for a good commercial lot or something similar. But once you know where it's going to open, you can get some quick idea online of what FMV for the property would be and you'll know if there's any equity there. If there's a lot of equity for some reason then you're going to have competition.

Beyond that, any early reconnaissance you can do is helpful because a lot of times and places it's as is, where is, no looks. So if you can peer in some windows, walk around the property, check the neighborhood, etc beforehand you'll at least have a better idea what you're getting into.

Divin Kanyama · Answer

@Landon Harazin Going once without bidding is a smart move. Arrive early and watch how the opening bid, increments, lender credit bid, payment requirements, and closing process work. It is fine to chat with attendees, but avoid distracting active bidders; save process questions for the auction staff afterward.

Practice the same due diligence you would do before bidding: title search, taxes and liens, redemption and occupancy issues, drive-by inspection, and resale and rental comps. Set a maximum bid in advance:

Conservative value − repairs − carrying costs − contingency − required profit = maximum bid.

For this property, I would compare a long-term or student rental with a flip rather than choose a strategy first. Verify zoning, rental rules, parking, realistic rents, and turnover costs. A second bath may add value, but only if the layout and plumbing make it economical—run the numbers both ways.

Without interior access, use best-, likely-, and worst-case rehab budgets. Assume surprises in the roof, mechanicals, plumbing, electrical, water damage, and cleanout. If the deal works only under optimistic assumptions, pass.

The biggest rookie mistakes are trusting the opening bid or online estimate, overlooking title and occupancy risks, underestimating repairs, and bidding emotionally. Learn the process, record the result, and keep your cash intact this time.

As always, verify Michigan-specific foreclosure and redemption issues with a local attorney or title professional before bidding.

Dan Worth · Answer

Watching first is a smart move. Keep track of how many properties go back to the lender at the opening bid and how many go to outside bidders, because that shows you how much equity the regulars think is there. If this is a mortgage foreclosure sheriff's sale, read up on Michigan's redemption period before you ever bid, since the former owner may be able to redeem and stay in the house for months afterward, and that changes the whole deal. For rehab without interior access, I'd price the roof, furnace, electrical and plumbing as if they all need work, and treat a second bath as upside rather than something built into your max bid.

Diana Khan · Answer

@Landon Harazin, going just to observe sounds like a good first step. I’d bring the sale notice and follow along with the opening bid, bidding increments, payment deadlines, and any announcements that change the written terms. Introduce yourself before or afterward and ask whether there’s time for questions. For practice, research the title, taxes, comparable sales, and likely rent, then write down a pretend maximum bid before you arrive.

My perspective as a Maryland real estate attorney is to look closely at what happens after someone wins. Before putting money down, I’d have a local attorney or title professional check which liens could remain, any redemption rights, and when possession could actually happen. For this house, I wouldn’t choose a rental strategy or budget for another bathroom based on the listing alone. Local rental rules, actual rents, layout, and plumbing costs would matter. Without interior access, I’d use a range of repair estimates with room for major unknowns.

I’m glad you’re giving yourself time to learn without the pressure to buy. Comparing your research with what happens at the auction should be useful, even if you never pursue this property. Happy to stay connected!

Going to my first foreclosure auction tomorrow as an observer – tips? thoughts?

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