Purchasing Real Estate at Public Auctions
Author: Charles Petty
If you plan to invest in distressed property, you can always try to get a good deal at the public auctions of such properties. You will acquire such homes that are auctioned to recover dues payable to the banks, HUD, IRS etc. You may get a good home at a price lower than the market value at such auctions, if you are the highest bidder. It is an art to purchase at the public auctions and you have to follow a scientific approach and prepare for it.
The financial institutions undertake public auctions on the foreclosed properties that they hold. The auctions are undertaken, when the homeowners fail to honor the legal commitments of payments or mortgage loans repayment and taxes like property tax and income tax. Other reasons may also exist, like death of owner, government seizure for illegal activities, lawsuit, divorce or even property abandonment. The foreclosure auctions are conducted literally outside the courthouse, where the buyers keep bidding on the properties and the highest bidder gets the property. These biddings are highly intense and process very fast. You need to be well prepared before you participate in such an auction to purchase property.
It is very important to conduct a thorough research about the property that is auctioned. Make yourself aware about the market prices for that area, where such homes are located. If possible, you should check out the property and inspect it, if allowed to do so. At least get an idea of the extent to which you may have to conduct any repairs and improvements on it. You will have to budget it and then consider a maximum price that you will bid. It is necessary that you also find out the liens and overdue property taxes on the property, which you may be liable to pay as homeowner later. You will have to be prepared to undertake some repairs and maintenance jobs on the home, as it would not be in the best of shapes for want of funds on the part of previous owners.
Before you bid, you should plan, how much returns you expect from this investment. Consider the expected returns and establish the maximum bid that you can make. You should be prepared with some amount that you may have to pay as deposit. Some states require the entire amount to be paid on the day of the auction. Be ready to pay something extra. There could be some payments that you are not aware of and you need to pay them on the day. You should also have some cash in hand to pay for the closing cost at the auction. You should also be prepared to pay a deposit by way of your cashiers check or certified funds.
Last but not the least, you have to be perfectly dressed for the auction. Your appearance can give others a feel that you have ample funds to bid and some may pull out of the war of bids. Moreover, do not get deeply involved with the properties and also do not be carried away by the excitement of bidding. You have to be realistic in your expectations of the outcome. You also need to be aware of the redemption period for the owner, if the property owner plans to buy back the property.
To prepare for a public auction is the key to get the right property to invest in. Put in a few more dollars to spruce up the place and you would be ready to reap the profit of bidding perfectly.
Written by: VD
Date Written: 06/30/08
Reviewer Assigned by: David
Reviewed by: GD
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Quality Control Completed on: 02/07/2008About the Author:
Virtual Real Estate Investing Experts Kim and Charles Petty have been involved in over 700 real estate transactions in the last 9 years and are the creators of the Ultimate Turn Key Virtual Real Estate Investing Systems for investors all around the world who want to take advantage of the awesome profit opportunities in today’s real estate market. They are the worlds leading experts on Virtual Real Estate Investing.Go to http://www.VirtualRealEstateInvestingProfits.com or call 1-800-311-9228.
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