Auction?

Question

Hello all, I am new to this whole government auctions thing - I was wondering if anyone out there has attended a live auction for a foreclosed home. I recently registered with GovernmentAuctions.org to find a car and came across their foreclosure listings. Now I have some money in the bank and their list was very comprehensive. I just want some live auction advice. Thanks!

Vikram C. · Answer

I have spent considerable time recently at foreclosure auctions here in Arizona.  I have even bought a couple of properties in the past couple of months.  Here are some things to keep in mind if you wish to invest this way:

1.  Bidding for a property and buying it is very easy if you have the money.  The hard parts are knowing which properties to bid on and how much  to bid.

2.  In order to solve the hard parts, you will need to run comps to figure out how much a property is worth.  You will then need to check the property out and estimate how much the repairs will cost.

3.  But you cannot run comps and check out a property unless you know which properties are going for sale.  This means you will need to sign up with a bidding service that will provide you with the list of properties that are going for sale.  An alternative is to use the notice of trustee / foreclosure sale from the public records but you should assume that 80% to 90% of your time will be wasted because most properties do not actually go on sale.

4.  If you wish to wholesale the property, you will need a good list of potential buyers.  If you wish to retail the property, you will need good contractors because many auction properties require significant repairs before they will pass inspection.

5.  You will also find that there are numerous other investors who will be doing the exact same thing as you.  When you visit a property, you will often find a bunch of other investors there.  Most of them will be more experienced than you and will be able to evaluate the property more accurately than you.  You will need to figure out a way to quickly get up to speed or you may end up with the less desirable properties or you might overpay and not make money.

I don't mean to sound pessimistic.  There are plenty of people who make good money at these auctions.  The thing to keep in mind is that this is a business like any other and there is a lot of competition and the profits tend to go to the most savvy and experienced investors.

Account Closed · Answer

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There are a couple of suggestions in buying at an auction.  First, obviously, do research on the  property being auctioned -- this includes market value and estimated needed repairs, etc.  Second, develop your exit strategy.  Know how you will sell the house before you buy the house.  For example, are you going to remodel it and sell through a realtor, are you going to wholesale it to another investor, or keep it long term as a rental.  Then find out if they want a cashierâ€™s check pre-written or if you have time to get your finances that day.  You also want to know how much you are willing to spend and then stick to it and  be prepared to walk away. Donâ€™t feel as if you really have to buy something.  If the deal is not right for you, it is not a deal.  And lastly, make sure you make friends with the other investors.  Friendships with your competition open the door to many possibilities!  And you donâ€™t have to have a girl with you to network!

Jacques Columbo · Answer

Hello Jango,
                              
                              I've attended many auctions. I have couple suggestions for you. 
                              1- Do your homework. Go and visit the properties you want to bid on, know the value and firmly determine the maximum you'll pay for each property and DO NOT deviate from that no matter how high the auction is going. You'll regret it if you do.
                              2- Use the time at the auction to network. Come early. If you can come with a beautiful girl. I found out that she can quickly gather business cards and open up conversation better than I can. If you do not have a beautiful girl friend take someone from Hooters. It will cost you $15 an hour or so.  
          At the auction you have people there who have money. If you do a good follow up you can find a private lender there.
          Hey even if you don't buy any property you can have a friend. 
            Good luck with your auction.

Eddie Ziv · Answer

Hey Vikram, good to see you back on the board. I haven't seen your posts for a while.. :wink:

No Name, (Is that your real name... :lol: ) Vikram is right. Auctions (Government or otherwise) are not for the faint of hearts or the inexperienced. Aside from your no name name, you didn't say where you are from or the geographical areas of investment interest. If you are just starting, you can find really good deal among REOs and HUD properties. You better off this way.

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