Auction 101: Bidding On Your First Property
For first-timers who are intimidated by their lack of experience at public auctions, follow these steps to ease the confusion of your first property purchase.
Locate Auctions In Your Area
Finding live auctions is as simple as an internet search. Websites run by government agencies list homes that have been seized due to tax liens or foreclosures. Try searching databases maintained by:
The US Department of Housing and Urban Development
Another option is your local newspaper. Banks publish foreclosure notices in the public notice section. You can also find advertisements from auction companies and information from the sheriff’s or county tax collector’s office that helps you hunt down low-cost properties.
For busy investors who plan to use real estate as an extra income, it could be worth your while to enlist the help of a professional real estate agent. They often keep lists of homes in foreclosure in the surrounding area.
Assess Available Properties
All properties are not created equal. To find the right fit for your project, find the following information for each potential listing.
Current bid price
Previous purchase price
Length of time property has been unoccupied
Number of bedrooms and bathrooms
Sales history of homes in the surrounding neighborhood
This information isn’t always readily available. You may be able to find more information via an MLS search, public lands records, or various real estate websites that publish property data. Of course, if you’re working with a real estate agent, they will provide all the data you need to make the right decision.
Some auction sites include pictures and map data. At other auctions, bidders may be allowed to visit the property or hold open houses before the sale occurs.
Perform A Title Search
When you’ve found a few properties that you like, take some time to do a thorough title search. This process ensures your property doesn’t come with some unfortunate surprises.
During your search, you’ll need to:
Obtain records from the tax assessor to verify the tax status of the property.
Locate the property’s deed either physically or online.
Investigate the property’s sales history to ensure no one else can claim ownership.
Check for liens, unpaid mortgage commitments, and legal judgments against the property.
Once a property has cleared these steps, you’ll be ready to start placing bids on your first investment property.
Last but not least: Don’t overlook your financing options. Be sure to meet with your trusted home mortgage professional to get your pre-approval in place. This important step will help you create an affordable budget.