It was an exciting for me to walk into the courthouse and have the clerk ask me are you “placing a bid?, Go to that line”. This time around I was not placing a bid I was doing research on a list of properties that I had been doing homework on and I wanted to see what they will be selling for at the auction. In my market there are many investors who purchase properties at auctions, with the sole strategy of fixing and flipping houses. I normally would not go this route but I have come across an investor who is itching to do his first fix and flip and wants to do it yesterday and I know if there’s one place you can buy properties for a good deal is at an auction or is it? That’s a topic for another post but for now here are the steps to be able to buy a house at a real estate auction.
Find out where the sheriff sales are being held in your area.
This is the first place you would want to start, it’s very simple just google “sheriff sale in….” and you’ll more than likely get information on where and when the next auction will be held. In my are the auctions are in a court house and more specifically in a courtroom inside the courthouse, in other areas where I live they hold the auction in the basement of the courthouse, or in the lobby. The point is different city’s do the actual action in different formats, they’re not all equal do your homework and show up at the right place.
Go to the sheriff’s office and ask them for the list.
I know you’re excited but before you go running to the auction make sure you do some research of the properties being sold, ask the sheriff’s office for the list of properties that are going to be sold at the upcoming auction. If your sheriff’s office is aware tech friendly then you’ll probably be able to download the list directly from their website if not you’ll have to take the ride down to the sheriff’s office and get a hard copy or you can also get it in a local newspaper by law they have to publicize it. From there do your do diligence, be mindful that some of the houses will be occupied and you’re not allowed to disturb the people living in the house at least that’s house it’s done in my area they have it written in bold letter on the top of the list so you’ll have to get creative. I’m going to cover this in another post.
Find out how often they have a real estate auction.
Auctions in my area are not done every week depending on the market they have them twice a month or once a month. If you live in a larger city this might the normal time frame for you, in smaller cities you might have to wait longer for the auctions.
Find out what is required to bid and how long before you need to pay the balance.
This is very important, know the bidding requirements and the rules. In my area “the successful bidder must post a deposit of 20% of the total bid price at the close of the sale. The balance is due within 30 days of the sale. Additional time is not granted to obtain a mortgage”. That’s straight out of the sheriff’s website, your requirements might be different than mines some areas you have to pay within 10 days some you have to pay the full balance that day.
Auction types and right of redemption.
There are different types of auction types, all that means is that the auction process can vary. For example at the auction I attended they do a “open type” auction sale which means they do it out in the open for everyone in the room to hear the plaintiff starts the bid at $100 and it get’s bid up until the highest bidder wins it. There are other types of auctions like sealed or mailed bids and upset auctions. Some areas might have a redemption period which means the homeowner can still keep the house if they come up with the money to buy their house back within a specified period of time, this is important ot know ahead of time as it can impact your decision on bidding.
Once you have this information you can go ahead and buy your first property at auction, the question is should you? Let me tell you there were some properties being sold and I just couldn’t justify the sale price and there were also some properties the bank didn’t sell because they just kept outbidding everyone, oh yeah I didn’t mention the bank can outbid you and not sell the property at the auction you see some banks have to sell the property for a certain price and if they don’t get it they won’t sell it and it’ll become an REO. You really have to know your market and study the houses that are on the list for the upcoming auction and stick to your max bid don’t get emotional it can cost you.
I hope you were able to learn something new from this post, feel free to share or comment below if you have any questions or want to add something that I may have forgotten.