To get the best information about how to bid at a real estate auction is to actually attend one. Go to a Trustee’s Sale to see what happens. Don’t take any money with you, instead, take a note pad and pen to write down what happened so you can later use your notes to develop your own personal bidding strategy.
Purchase Strategy For Buying Foreclosure Property
If you are going to be buying a property at a foreclosure real estate auction you have two choices for paying for your real estate. Your first choice is paying cash. Cash is king, but not always practical or smart if you can obtain financing. This brings up your second choice – paying for your new real estate with mortgage financing. The worst thing you want to do is to bid and then try to figure out your financing.
If you plan to finance your home purchase get pre approved for a mortgage first. You want to know that the financing is basically in the bag pending putting the paperwork together after your bid is accepted. You could stand to lose some or perhaps even all of your deposit money if you have to back out – a costly and unnecessary mistake. Get your financing figured out first.
Go To A Practice Trustee Sale First
If you plan on attending a Trustee Sale to observe, make sure that you get there early enough to see what happens before the auction. Make sure that you find out if you must register with the Trustee to be able to participate in the bidding process. This is often the case. Be on the lookout for what kind of deposit you will need in order to bid. Typically, cash or cashier’s check are the only two acceptable ways to put money down on any property where you have the winning bid. The typical amount is around $10,000.
Make sure that you are on time. Auctions are very structured and they happen fast. No one wants to stand around wasting time at these auctions. Everyone there is serious and punctual so don’t miss your opportunity with thinking that the auction proceedings will run behind schedule.
Do Your Research And Stick To Your Maximum Bid Strategy – No Emotion
If you have done your homework around the properties you are interested in set your limits, or maximum bids, and do not exceed them. Always keep in mind that there will always be more Trustee Sales. The last thing that you want to do is get yourself into some emotional bidding war – just to win the bid. You do not want to end up with a major financial problem down the road by paying too much for a property because of your ego.
You should also find out of the lender is present at the auction for the homes that you are bidding on. If you can, and if the lender is present, introduce yourself to them so that they can put a face to a name. You want to do this with any lienholder on the property. By giving them a face to work with instead of just a name you make for a smoother transaction.
Items that you want to calculate before you go to a bid so that you can set your maximum bid:
Market Value of the Property
Prior/exising liens on the Property
Interest during the holding period
Taxes and Insurance during the holding period
Closing Costs of Sale
Total Of Costs
With these items in hand when you go to an auction you can use this to keep your bidding in check based on your paperwork. This list will also help you do your research as you prepare to buy a foreclosure property at a real estate auction. Good luck!