Saving Money With Smart Foreclosure Auction Bidding
The real estate business is said to be a great source of income, but how do you actually go about bringing in a profit without taking on huge risks? If real estate investors aren’t landlords, then chances are they have been buying and selling properties they have discovered through real estate foreclosure auctions. Real estate is like stock in that you have to buy low and sell high in order to make a profit. Foreclosure auctions are a great tool for buying low, if you learn the process and make wise decisions.
Market Research
You must get familiar with the market you are buying in, so using nationwide foreclosure auction resources and buying property in markets across the country can be very risky. You don’t want to invest in property in Florida for example, if it is sitting in the middle of an area wiped out by a hurricane. The smart way to buy from a foreclosure auction is to determine which areas you wish to invest in, then learn the market and wait for auctions in those areas.
Bidding Etiquette
If you can contact the owner of the home before the property hits the foreclosure auction block, it is possible to buy the home before it gets that far. In general, there will be about a month where the homeowner is free to find a buyer. Direct sells during this period are often gladly accepted by the mortgage lenders who don’t benefit much from the auction process.
Even if a deal is not struck with the homeowner, you can always just bid at the auction. Once you locate property you are interested in, you must determine which realtor is handling the auction and find out the details, such as if you are required to show up or if you can call in a bid.
Do not expect the current homeowner to open up with the details of the property. It is essential that you first acquaint yourself with the state laws for foreclosure auctions in the state you will be bidding, since they are different in every state.
How to Determine Your Bid
In general, you might consider finding the estimated market value of the property and bidding around 20% less. Estimated market values are listedin valuation reports which are public record. However, it is urged that you not only inspect the property yourself, but hire your own home inspector to give it a once-over. You don’t want to turn a foreclosure auction bargain into a loss of money if there are serious flaws with the property which will cost a lot to fix.
On a final note, realize that you will not have a lot of time to pay up for your auction purchase. Keep that in mind when determining your bid.
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