Here are some reasons why you should consider buying at foreclosure auctions. Whether you are a buy-and-hold investor or like to buy and sell property for fast cash I believe that auctions in the current market should be a source of deals to supplement your overall investment strategy.
When I recently attended an auction in Orlando, Fl I was amazed to see the small amount of retail buyers. Bidding was not that fierce on individual properties, half of the crowd attending the auction consisted of investors who were bidding on multiple properties.
Buy at Fire Sale Prices
While observing the entire auction in Orlando recently, I was amazed to see how cheap properties were going for. Oceanside condos selling for $150,0000, Five bedroom brand-new homes selling for $80,000. 50% off retail value prices were not unheard of and I was shocked to think that banks would be willing to let these properties sell at these prices.
What I like about auctions is that you know prior to bidding your max allowable offer. If you have taken into account your profit, holding costs, marketing costs and closing costs. Once the auctioneer says sold, you will have a good deal and there is no long drawn out process to get the property.
Sometimes it is frustrating dealing with sellers, banks and the entire short sale process in some cases. With auctions you can close on your property within 3-4 weeks.
Seems like a contradiction right? If you buy in the right area and at the right price the odds of losing money is minimized. If you studied your market, you did your research on properties coming up for auction and you have a profit strategy in place for the particular property then using this approach to make money in real estate may be the right option for you. At the minimum, it should be a tool that is part of your overall investment strategy.
Buying Auction Real Estate Deals Conclusion
Before you go this route I would advise to know your market. Take the time to talk to realtors and find out what type of homes are selling in your area. Be sure to also ask what are buyers after and in which areas. If there are no properties in these areas coming up at auction then look at other areas but proceed with caution. A clear profit strategy should be in place with a plan B in case things do not go as planned.
Author Bio: Gerhard Cronje is an active real estate investor in the Central Florida region.