In today's market the number of homes in foreclosure or those that have already been taken back by the bank are starting to eclipse the number of privately sold homes on the MLS. With the huge increase in these numbers it becomes imperative for real estate investors to add foreclosure auctions to there tool belt of real estate investing techniques.
Foreclosure auctions are not without there pitfalls and like with any investment strategy it is important to know what you are getting into before you plunk down the cash and bid on one of these homes at the courthouse steps. We don't have the space here to discuss the foreclosure auction process but if you are interested check out my article, "How do I Get to the Courthouse Steps."
Once a home is on the auction block at the courthouse there are 5 key things you need to do to not only get the best deal but also make sure you are protecting your cash.
Money, Money Money. Before you even think about bidding on properties at foreclosure auctions you need to line up your financing. If you are paying all cash you are golden but if you are like all of the rest of us you need money. Most states provide a very limited time to close on houses won at the sheriff's sale. This can be anywhere from immediately after the sale to a couple of weeks. The best place for fast cash is your local hard money lender. Build a relationship, get qualified and have them ready to fund your deals when you find one.
Finding homes. Most cities have services where you can get listings of homes that are or will soon be up on the foreclosure auction block. There may be a fee associated with these. You may also go to the courthouse and look up the sales yourself. All of this information is public record.
Finding deals. Once you have found the homes that will be auctioned you need to put on your real estate investor hat and do your due diligence. Look at the homes and do comparable sales analysis to decide what the home is worth and if it is an area that you want to invest.
The Auction. Foreclosure auctions can very slightly from county to county but for the most part they are the same, a confusing process if you are new to them. I recommend heading down and watching a few yourself long before you actually bid on a house. But once you are ready you may not want to go it alone. Do some research and find a Realtor in your area that specializes in buying at foreclosure auctions and enlist their help at least for the first few deals.
Close the deal. Of course being the winning bidder means you need to get the deal closed, and probably fast. You already have your financing lined up but you may also want to have done a title search prior to bidding so all that is left to do is sign the papers and make some money!
I encourage you to start researching your local foreclosure auctions and get familiar with what is available. This will not be your only real estate investment strategy but it can definitely be a profitable one if you take all of the steps needed to ensure you are getting a good deal.
There are many strategies you will want to investigate to work the foreclosed homes marketing. Today's foreclosure market is one of the hottest in 15 years and sellers and banks a like are beginning to make deals to get their borrowers out of foreclosure.
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