Pros are often great price and have even been to one that had great financing too. Cons are sometimes you do not know what you are getting like at foreclosure auctions. Property may still have liens, judgements against it and you can not even get inside the property. There may be irate tenants or even the owner still in the house.
Ted Jr is right and to add to what he said, Do the research to find out as much as you can about the properties, so you know what you are getting. You don't want to be unhappy after the auction.
I received some great advice from another investor concerning foreclosure auctions that I thought I would share.
1) They always personally inspect every property the best they can beforehand (looking through the windows, outside structure, etc.)
2) They only bid on properties that are VACANT ( a lot of people facing foreclosure just pack up and leave instead of facing the inevitable).
They have bought properties before that were occupied and the people trashed the place the day before the sale. I have heard of people taking hammers to all the toilets, fixtures, etc, ceiling fans being ripped out of the ceiling, all the doors kicked of the hinges, etc. From now on, I will only bid when the property is VACANT.
Tax auctions are very often unimproved lots. Some of these are unusable. Both foreclosures and tax auctions have a low yield in the sense that there are very few (percent) of the properties that actually make it to the auction (particularly the ones you might want to own). This is also very area dependent. You certainly can get some good deals if you are patient.
Pros are often great price and have even been to one that had great financing too. Cons are sometimes you do not know what you are getting like at foreclosure auctions. Property may still have liens, judgements against it and you can not even get inside the property. There may be irate tenants or even the owner still in the house.
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
Ted Jr is right and to add to what he said, Do the research to find out as much as you can about the properties, so you know what you are getting. You don't want to be unhappy after the auction.
I received some great advice from another investor concerning foreclosure auctions that I thought I would share.
1) They always personally inspect every property the best they can beforehand (looking through the windows, outside structure, etc.)
2) They only bid on properties that are VACANT ( a lot of people facing foreclosure just pack up and leave instead of facing the inevitable).
They have bought properties before that were occupied and the people trashed the place the day before the sale. I have heard of people taking hammers to all the toilets, fixtures, etc, ceiling fans being ripped out of the ceiling, all the doors kicked of the hinges, etc. From now on, I will only bid when the property is VACANT.
Hope this helps !
Jason
I purchase quite a few properties at auction. There are some good deals, but plan for problems.
Example 1 - I purchased a property at the min bid, 28k, put 8k into rehab and sold it for 70k. Great Deal!.
Example 2 - Property purchased for 66k, put 10k into it and sold for 83k. Not a great deal!
Things to do -
1. ALWAYS inspect the property before the auction.
2. Never buy occupied properties.
3. DO YOUR HOMEWORK. Know the area of the property you are bidding on, do comps on RECENT SALES not appraisals or tax values.
4. ALWAYS have at least 10k built in to the purchase price for rehab. I often figure on 15k just to be safe.
5. Make sure you will make at least 15k on the deal after all expenses, holding time, etc. It's just not worth it otherwise.
Goodluck!
Thanks guys I will be going to the auctions here in washington, DC to take a look before I consider buying
thanks
Tax auctions are very often unimproved lots. Some of these are unusable. Both foreclosures and tax auctions have a low yield in the sense that there are very few (percent) of the properties that actually make it to the auction (particularly the ones you might want to own). This is also very area dependent. You certainly can get some good deals if you are patient.
Title work title work title work. Do not assume that all posible party defedents have been properly joined and served.
A few years ago I went to a HUD voice auction held at one of the large Washington DC hotels on Connecticut Avenue.
Often, properties that did not previously sell on sealed bid, went for much higher prices at the voice auction.
Be wary of auction fever if you attend a voice auction.