When repossessed homes are sold through an auction, the trustee (the lender who has obtained a deed of trust against the property) is obligated to get as much as possible from the sale. Buying a house in an auction isn’t as easy as it seems. Real estate cash investors often compete aggressively to buy the property and sell it again at a higher price possible. If you are planning to buy at a foreclosure auction, here are four tips to remember:
There’s more than one way to auction property. Those managed by large banks or the government, attract seasoned buyers and experienced investors. Such auctions usually involve more than one property to be auctioned. Also, banks ensure that the property is up to date in terms of property, etc Auctions are often published in newspapers – follow them regularly to look for homes that interest you.
The reason why not everyone’s excited about buying from an auction is, because it is relatively easy. However, you will have to remember a few things. For one, you will have to know how much money to bring to the auction. In a repossessed home auction, you cannot get photos of virtual tour of the house – they come with a buyer beware warning. The original owner hasn’t left the property as yet. It is your duty to be mindful about this. Drive to the property to check if the neighborhood within the property is worth is good. Curb appeal is also important, because the way a house looks outside is the way it looks within as well.
Even before you get ready for the auction, remember to decide on the bidding price. You’ll need professional help to value the property and set up a cap rate beyond which you will not bid! You’ll also have to decide what to do with the purchased property – do you intend to use it, or let it out on rent. Also, remember, if you’ve made a bid in an auction, this is final. There’s no backing out.
This is especially true for large bank related auctions. For such bids, the lender always make the leading bid for an amount he is actually owed. And because of the fact that most repossessed homes lose value, it is possible that nobody responds to the bid. If you really like the property, contact the bank after the auction to look for a viable option.
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