When you are looking for ways to buy off-market properties to avoid the crush of competition in the mainstream listing system, foreclosure lists are a must-have resource. Bidding on foreclosed properties and those in pre-foreclosure is a great way to get a good deal because those homes are typically being sold below their maximized market value. Some are even sold short of what is owed on the mortgage.
What Is a Foreclosure Bid?
Many foreclosed properties are sold at auctions. An auction foreclosure bid is just a bid or offer to buy the property at a set price. High-demand properties may be bid up a fair degree before selling, so you must go into an auction with an idea of your maximum bid for each property you will try to buy.
You can also find properties before they are sent to auction and make bids on them to close a private sale before the competition gets a chance to move in. You need pre-foreclosure lists that let you contact owners before they lose the property and lists of repossessed homes that have not yet been put on an auction schedule.
How To Find Foreclosure Auctions
Local government websites are a great place to find city and county auctions that are sponsored by local governments to dispose of properties. Newspapers also broadcast auction announcements for those bodies and usually also carry ads from auction houses conducting private property auctions. You can also check out the websites of auctioneers and auction houses in your area to learn more about their sale dates and lots.
Real estate brokers and lawyers with practices specializing in real estate issues are also great resources. Don’t be shy about tapping into your professional network for tips on where to find auctions for foreclosure homes.
How To Bid on a Foreclosure
Auctions often provide a short window to close on financing after you win a bid, but that does not mean you can afford to wait until after bidding to apply for financing. There are always cash buyers in the mix, and taking too long to pay can open an opportunity for the runner-up to buy the property. Make sure you do the legwork to understand what properties are available and line up the money you need for each one you are trying to buy.
Suppose you have the capital to enter the foreclosure bid list with cash. In that case, it’s a lot easier to make positive relationships in the community because auction houses and other participants both appreciate someone who can close promptly after making a deal. When that is not the case, you need to line up financing to a maximum amount in advance. If you are calculating your ARVs (after repair value) correctly and figuring out your maximum bid, this is not a difficult step to add.
Once you have studied the properties and prepared your funds, all that is left is to attend the auction and make your bids. You may not win every time, but if you understand your numbers and restrain yourself to just planned purchases, you will find great deals at foreclosure property auctions.
Ways To Win a Foreclosure Bid
Learning how to bid on a foreclosure is just the first half of the equation. You also need a strategy that helps you win, and it needs to go beyond knowing your numbers. Research and calculation can tell you how much money you can afford to spend, but you also need to know when to place your bids and how to shut down competition if you are going to avoid going to your maximum bid. Since success is about getting the best deal, strategy is the key to closing.
Dressing professionally and showing restraint will show other bidders that you are serious. It can also project an aura of wealth that might make them hesitate before committing to a bidding war. Hold off on earnestly bidding until the auction slows down; if things heat up, then decide whether or not you want to come out on top. That can help you avoid heated moments that lead you to bid beyond your budget. Finally, stick to your calculations because it is easy to get caught up in a fast-moving auction.
Auctions can be intimidating if you go in unprepared, but doing your research should put your mind at ease. Remember to make a plan, stick to it, and avoid being drawn in if other bidders start playing up the cost of the property. If you can do that, you can make a killing by lowering your costs for properties and widening the margins after repairs are done.
It’s all about knowing which bidders you do not want to compete with. Buyers looking for a personal home at a great price will generally go higher than investors. You also need to be aware of your investment model and how it affects your maximum price. Once you get those details worked out, it is easy to get into the rhythm of a foreclosure auction.