Buying REO Properties At Foreclosure Auction

Buying REO Properties At Foreclosure Auction
By Peter Cronje

Recently I had the opportunity to buy a townhouse at a foreclosure auction. The auction was held in Orlando Florida, hosted by Auction dot com. This was my first time ever purchasing a home at an auction and was quite a learning experience. If you are considering buying a property at a live auction here are a few tips to make sure you do not lose money and make a wise investment.

1. Do your homework first.

There is certain days prior to the auction you can inspect the properties that are up for auction.

Make sure that you take an inspector, ask them to do a quick assessment of the property and cover major risk areas such as roof, plumbing and electrical. You may want to negotiate a reduced fee if the inspection is only limited to major areas.

2. Know your market.

You have to really know if the property you intend to bid on is in demand. If you intend to sell it fast, you have to know what you can sell it for and what your maximum bid price will have to be to ensure your profits.

3. At the day of auction.

You most likely will have to present your driver’s license, a check and a cash or check of usually $2500.

When you bid, make sure you don’t get excited and ratchet the price up too fast. Set on the sideline and see what the action is. If there are one or two bidders he can jump in approaching your maximum bid and many times you will be successful. No guarantees though.

4. If you won the auction.

You can expect to sign a bunch of paperwork that the bank will need to sell the property to you. The final purchase price is determined by your winning bid plus the auction fee which is usually $2500.

5. After the auction.

Get your property ready as fast as possible. If you intend to flip it, post it on Craigslist and get it on the MLS as fast as possible.

6. Financing

If you’re buying cash you can use a partner at funds to close with and split the profits unless you have the cash yourself.

If this is a buy and hold it may be wise to get financing on a fixed rate and sell the property on a lease option. Expect to put at least 20% down.

For more information about making money at Bank REO Auctions, visit []. Also receive a free case study about how the author made $19700 in only 2 weeks.

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