A Foreclosure Auction Guide to Buying Property

Buying property at a foreclosure auction can be one of the most invigorating experiences for an investor. While there are great deals out there, if you don't know what you are doing you can spend more money than you need. Knowing the ins and outs of the foreclosure auction market is essential. Here are a few things to keep in mind when you are going to try your hand at the foreclosure auction market. 

Do Your Homework

Start out by looking at possible auction properties ahead of time. In most areas, they will publish upcoming auctions in the classified or real estate section of the newspaper. You can call and get the address of the house before the auction and go by and look. You will definitely want to at least look at the property before you buy it. Investigate the neighborhood and find out if the house represents a good value. You can get a feel for the area and determine whether or not you think you would like to buy the property before the auction starts. 

Inspections

Sometimes, you can do an inspection on the property before you bid. You can hire your own property inspector or the bank might have already had an inspection done. Regardless of who has the inspection done, you need to find out all the details of the property. You most likely do not want to take on any major overhauls like fixing the foundation or getting rid of toxic substances. Therefore, you want to know on the front end if any conditions like this exist. There will be a minimum fee you will be required to pay upfront so make sure you are very interested before hiring anyone.

Determine Your Limit

Before you ever show up at the auction, you need to determine exactly what it is that you are willing to spend on the property. The last thing that you want to do is get into a bidding war with someone who is willing to spend more than you. You need to determine how much money you could make on the property and set your maximum bid below that. Good property investors make their money on the front end. Many new investors come to auctions and get caught up in the moment and end up spending more than they should. Do not let this happen to you because it is a fatal error that will hurt your financial picture in the end.

Be Prepared

One reason that banks sell foreclosed properties at auction is because they want to unload them fast. This means that they will rarely allow you to secure financing for a property bought at auction. They want you to come in, buy the house, and take it off their hands. This requires that you bring cash or a check to the auction with you to buy the property. Sometimes, you can put a substantial down payment down and they will give you a day or two to come up with the money. Regardless of who is doing the auction, you will need to have easy access to the money.

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