Buying Foreclosure Properties In Todays Real Estate Auctions
Real estate investors have been getting great deals on properties at bank auctions for years
. However, in the past decade, the entire nature of the real estate auction has changed dramatically. I remember personally when a real estate auction was a subdued, simple affair with only a few people in attendance and the properties were sold from the courthouse steps. (No, not because Im so old, but because the nature of the game has changed completely in the past 10 years). Now, however, these auctions can be somewhat riotous affairs, and often there are a lot of people involved who may not have that great of a knowledge of how real estate works.Now, I think its great when people get involved in real estate investing. After all, thats why I teach people how to do it. But, when you throw hundreds of would-be investors into a small space and start holding an auction, things can get a little messy. Add on to this that banks and lenders have completely changed the way that they view these auctions from the way they did a few years ago, and if you are not on your toes you will not only lose out on seriously good deals, but you could lose your shirt in the bargain.
It used to be that lenders auctioned off foreclosed properties often for pennies on the dollar just to get them off their hands. Now, however, there are so many properties in foreclosure that a bank will not take just any offer on a property. They may send a property to auction 3 or 4 times and ask market value or higher for that home because they simply cannot afford to lose the money on it. Only when a house has not sold repeatedly at auction does it become a good deal (in most cases, of course) in this day and age. When you do your research on the auction, you need to check to see what properties are repeat offenders, since they will likely be the best deals.
On top of this, many banks and other lenders will try to incorporate legal fees accumulated during foreclosure into the cost of the property. Legally, you are generally not obligated to pay these fees, but watch what you sign or you could be agreeing to do so. In addition, properties that have been at auction several times may have a variety of hidden problems like wiring, mold and other interior issues that tend to develop when a house is left uninhabited for a long period of time. A simple drive-by BPO (broker price opinion) or your own drive-by estimate may not actually encompass all the issues that a property has.
When you are buying properties at auction, you should always learn as much about the situation of the property ahead of time. Check out crime rates in the area, crime relating to that property (e.g. vandalism) and also try to determine whether the last owners may have done interior or unseen damage to the house before they left. You can get some seriously amazing deals at todays real estate auctions, but you have to know what to look for and when to act in order to succeed in this type of investing endeavor.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.
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