Let’s say you made the exciting decision to take a step towards making an investment in real estate by purchasing property at auction. This is an exciting decision and also a big one too.
I am writing this article to guide you through the steps you should take. Yes, before you buy a property off the court house steps there is a process you should following starting with:
- Doing your research on the property
- Driving by the property if possible
- Getting your financing in order
- Confirming the auction details even on the day of
Many auctions are held on the court house steps with an auctioneer and a group of investors of which you may be one, and it truly pays to do your due diligence.
Let me tell you a story about a recent foreclosed upon home up for auction that did not go as planned for the purchaser.
We had a gentleman who had bought an investment property at an auction. He told us he had no outstanding liens on that previous property purchase and he was excited to buy another property. We were halfway through the lending process, the appraisal had been done, it was all looking good. We ran a fraud report (and yes, every buyer gets a fraud report when applying for a mortgage), and we found that the buyer had a property from the Court House steps that had a mortgage attached to it from the previous owner. The deal headed south from there and he lost all the money he put into this all because he did not request a title search.
I want to save you any similar potential aggravation down the road.
Let me get back to due diligence, here are some ideas.
Due diligence means – checking for liens on the property. This is extremely important as you might be required to pay off these liens if you have the winning bid. It is worth hiring a title company to run title searches on any properties you may be interested in bidding on.
Do that drive by – this will at least allow you to see the home’s condition from the outside. Homes in foreclosure may still be occupied but at least you can assess the home and the neighborhood.
Have your money in order – most foreclosure auctions accept cash, bank money orders or cashier checks for payment.
Confirm all auction details, even on the day of – it is common for foreclosure auctions to be postponed or cancelled so make that phone call.
At the end of the day purchasing at auction can be a lucrative and a great way to start of grow your investing career. The last thing you want is years of heartache because you did not do your research. Please take advantage of all the information that is available to you, and remember I am always here to help you. Pick up your phone and call me at 813-361-6350.