The secret of power-bidding
Bidding at a foreclosed real estate auction is not for the faint-hearted – but there are potentially fantastic profits to be made for those who go about this task in an organized and rational way.
On the downside, you may not have been able to inspect the property and it certainly won’t come with a warranty but your mental guide price can be more than a shot in the dark, if you’ve done your homework.
Here are some tips for success in the real estate auction game:
First, it helps if you’ve already got some track record in real estate investment and you know the market place. It’s good if the house you’re bidding on is in a neighborhood that you know or have studied in some depth. Attend local open houses to get a better feel for the market and talk ‘innocently’ to the realtors about their views either on the locale or even the specific house you’re interested in.
Second, the first auction you go to should definitely not be the one you’re going to place that all-important bid in. Go to as many auctions as you can, starting tomorrow, to get a feel for the way they work. Details are usually in the local paper. Talk to other investors to try to pick up some of their ‘secrets’.
Then, make sure you’ve done as much research as possible on title, outstanding liens or other issues that might affect legality and resale of the house.
At the auction itself, take with you evidence that qualifies you to bid. This may be cash or a cashier’s check that covers a large part of the expected price of the deal. Most auctions are all-cash sales but, in a few cases, it may be enough to demonstrate you have a deposit; you will then get a month or so to come up with the rest.
Let the bidding start without you. Don’t show your hand till as late as possible and always wait until just before the auctioneer’s third price call before raising your hand.
Know exactly in your own mind what your ceiling figure is. The auction is not a test of your bidding prowess; it’s a test of your investment savvy. Don’t mix the two up!
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