How to Find Real Estate Deals with Online Property Auctions

How to Find Real Estate Deals

How to Find Real Estate Deals with Online Property Auctions?

Houses get auctioned off for various reasons.  For example Foreclosure or failure to pay taxes to the IRS or property tax.

Sometimes you can get an amazing deal on a property through auction.  Why?

Houses typically sell for really low prices at auction for two main reasons:  1) Because you have to be able to pay cash (either your own or through a hard money loan) and there are only so many people who have access to the cash to buy a house outright, and 2) Because there is a lot of risks involved (more on this in a moment).

So, in other words, few people are both willing and able to buy the properties.

Be aware of the risks

Be very careful because it’s hard to know exactly what you’re getting.  Typically you don’t get to go inside these properties or inspect them in advance.  That means you’re not likely to have a very accurate picture of how much you’ll have to invest in the property to get it ready to sell or rent, so it’s best to overestimate repair costs.  You never know what you may run into.

Sometimes people get angry when they’re losing their house and damage the house out of spite.  They could pour concrete down the drains, knock holes in walls, or tear out wiring or copper pipes.  There could be foundation problems or termite problems.  In other words, things that could be VERY expensive to fix, not to mention a lot of hassle.

Because of the risks involved, this generally isn’t the best place for the average person to start investing.

That being said, the properties you get from an auction can be a crazy good deal.  Especially if you know how to do a lot of the repairs yourself.  It may take a lot of work, but the returns can be amazing.

A few tips for getting a good deal

If you can, at least drive by any properties you know will be auctioned and see what you can see from the outside.  Of course, if it’s possible to legally get access to the inside of the house (in other words, without trespassing) before the auction, that would be ideal.  Often it’s not possible, though.  Be familiar with the neighborhood the properties are in and know what the house should be worth if it was in good condition.  Also, know what the land is worth.  In some cases, you can even be able to buy a property for close to what the land is worth.  Then it’s hard to go too wrong, as long as the house at least has some potential and isn’t falling down.

There are different ways to buy houses from an auction.  Besides the traditional ways of finding houses that are being auctioned, there are also some websites where you can find properties.  Here are a few:

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2 thoughts on “How to Find Real Estate Deals with Online Property Auctions”

  1. How do you bid at auction without money and how do you line up a cash buyer so you can bid on the property I see alot of good deals at auctions but can’t bid because I don’t know how to get the backing in case I win because I don’t have the funds at the ready

  2. That can be tricky. Usually auctions that you have to attend in person require you to have the money or at least a check right there on the spot. Unless you have someone with the money who will go with you to the auction, that may not be a good option. Sometimes online auctions give you slightly more time. You’ll typically need to have proof of funds, which you may be able to work out with a private money lender. In some cases you’ll have until the following day to make a deposit. If you have things lined up with your lender in advance, you may be able to make that work. But you’ll need to know in advance what the requirements are so you can get things lined up before bidding on a property.

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