buying homes at the auction
hello all
i am learning to purchase homes through the auction network and i have read a post from varying sources all with different opinions. the thing is most people say stay away from the auctions. i am alittle confused. from what i can tell the auction is the easiest place to purchase homes as long as you do your due diligence. and you can make the numbers work. i have attended a few auctions local and it is very attractive you dont have to deal with owners and all their self reasoning of why they want more than the home is worth and investors just want to steal their homes. the way i see it at auctions the title is clear (we hope) you pay for and your ready to go make money.
my question is what suggestions would you have for one whos has very little money but alot of time, iffy credit. who wants to purchase home through the auction. how to raise enough money to be able to purchase homes to fix and flip.
Comments (1)
The situation you describe would be a challenge in today's market for someone to acquire property with a clean title....much less at auction. You did not specify if this was a foreclosure auction, tax auction or just plain old auction. I am not familiar with your market so I can't even venture a guess.
I have bought lots of things at auction, electronics, cars, jewelry etc....but I have not yet bought real estate. From what I have read and understand, there are still a few matters i need to learn and understand before i go there. Depending on the auction type, when do you get possession of the property? What about other liens on the property? Do you have to evict if still occupied? What about recourse from other parties that can come in after the fact and have your sale voided starting you back at square one? None of these address the matter of what condition is the property in? Do you have understand of the property lines, easements etc that you are bidding on? I knew a guy locally that got some prime commercial (what he thought was prime) real estate along a major thoroughfare in our area at a tax sale for a heck of a price. Unfortunately it is along a utility easement and effectively useless....forever. He still owns it, but can't do anything with it....except maintain it and pay taxes. I saw another guy buy a property at a tax sale and found out after the fact that the property line somehow ran through the middle of a low end house. Don't know how that one ended. Does he own 1/2 the house? And finally I know of a guy that bought a residential property at a tax sale and afterwards went to view the property. A neighbor approached him and stated he has been wanting to buy that property for years and in less than a day, the guy more than doubled his money by selling the land to the neighbor.
Point is, it can be done. But there is obvious risk with this. Take a moment and get out of the get rich quick mindset and put yourself in the shoes of someone you might go to asking money to make such an investment. How would you feel about this idea? Your money being invested in an auction by a relative newbie. Now, go back to yourself and ask yourself how you can offset their risk, provide appropriate returns and properly vet the potential collateral. If you can't answer how your would do that, then I don't recommend wasting your time approaching any lenders or investors. If you can, there should be plenty of investors waiting for you. People do this all the time. Find someone at a local auction, offer to help in return for a mentor.
Chris Simmons, almost 12 years ago