Buying Foreclosures a Guide to Auctions

Auctions can be a good place to get a deal on real estate as long as you do your homework and show up prepared to win. If your just getting started my advice is to just show up to an auction and watch. Pick up the literature, browse through the offerings, see which one you like and then pay attention when that property goes on the auction block. See how much it sold for and how close your guess of its value was to the actual price someone was willing to pay for it. Look around, see how many people are actually bidding. See if the price gets pushed up quickly or just kind of site there. See if the bidders are there for just that deal or do they look like pros. This first step will remove some of the mystique of the auction process. In general auctions work like this;
A block of properties will be made available.
An auction company will advertise the auction date and time and will supply a list of properties.
The properties will be available for viewing before the auction.
Anyone wanting to bid on the properties must have a deposit in hand at the auction. Usually the deposit is 3% of the expected sale price of the home or a minimum amount (usually 3,000 to 5,000).
Bidders must be ready to finance or pay cash for the property within 30 to 45 days of the auction. Most auction companies have financing available on site or can recommend finance companies. If you have any doubts about your ability to get a loan do not wait till the auction, get started now. Call a local mortgage company, bank or Realtor and ask them to help you pre qualify for a loan.
Auctions do not tell you what the property is worth. It is their job to sell the property at the highest possible price. They do not care if you pay too much. If you are serious about the process then get information about the value of the house from Realtors, appraisers or the local county property appraisers office. See what other houses in the area are selling for. See what the competition is asking for their homes. Compare these properties to the auction property. Consider the affect of damages on the value. Make a list of all the money you would need to make the house ready to move into. Try to understand if it is worth buying an auction home as compared to any home in the neighborhood. If you can buy any home for the same price as an auction home then there is no great deal in buying at auction. Many people think that auctions guarantee deals. They do not. Uneducated buyers can actually end up paying more at auction then if they just bought a house from the seller directly.