If you’re thinking about buying foreclosures at auction, chances are you are looking for a deal. Foreclosures sold at auction, or on the courthouse steps via a Trustee’s Sale, can be the most profitable way to buy real estate in Austin. But, as we discussed in our post, Buying a Foreclosure at Auction? Better Do these 8 Things First, they aren’t for the beginning real estate investors. Here are 4 keys to success when buying foreclosures at auction.
#1 Money
Foreclosures bought at auction are bought with cash. No, not suitcases full of cash, but liquid and available funds you can get in an hour or two via a cashier’s check at your local bank. You don’t get a loan to purchase a foreclosure at auction, so if you’re considering purchasing one, you’ll need to have enough liquid assets to cover the cost of the purchase.
#2 Time
As you probably read in our post, Buying a Foreclosure at Auction? Better Do these 8 Things First, you need a tremendous amount of time to research each property before you even consider purchasing it. This could mean you spend several hours on one property and determine it is not the right investment for you and that might happen several times before you find one that you want to bid on. Buying a foreclosure at auction is nothing something you can do haphazardly if you want to minimize your risk and maximize your profit. If you don’t have ample time to invest in the research phase, buying a foreclosure at auction is not for you.
#3 Knowledge
Successful foreclosure investors are knowledgeable about the real estate market, can evaluate a property’s condition and know what it costs to make the necessary repairs. They know the tenant laws, environmental laws and they know their risks when it comes to purchasing this type of property. These are the types of issues that could end up costing you more than you’re willing to spend. Knowing as much as you can before you take on this type of purchase will help minimize your risk and maximize your profit.
#4 A Good Support Team
Successful foreclosure investors have the following people on their team:
- Buyer’s Agent
- Real Estate Attorney
- Insurance Broker
- General Contractor
A buyer’s agent can help the investor evaluate the market in each area and help them determine what market value is so they don’t overpay. A real estate attorney is imperative for helping the investor understand their rights for the specific property they are considering. An insurance broker will assist the investor with making sure the property is insurable to safeguard the asset they just traded for cash. A general contractor can facilitate the repairs necessary to make the property habitable.
Who is Successful at Buying at a Foreclosure Sale?
People who have the appetite for risk, the aforementioned attributes and see the benefits a team approach can provide just might be quite successful in this niche real estate market. Often they are general contractors or people who can get repair work done at cost.
Think You Might Have What it Takes to Buy a Foreclosure at Auction?
We’d be happy to discuss the process with you and act as your buyer’s agent. We know the area well and can help you evaluate market value of a property, so you don’t overpay. We also can recommend several other professionals that you need on your team to be most successful.
Not Sure if Buying a Foreclosure at Auction is Right for You?
If these characteristics are not you, consider other less risky, less uncertain and less challenging ways to buy real estate. Buying bank owned homes (foreclosures after they have been foreclosed and are now owned by the bank) are another great way of purchasing foreclosures, often at rock bottom prices. Bank owned homes can be purchased with a loan, so you don’t need all cash. You can also investigate the property in detail before you are committed to buying it, so you don’t risk your investment as much as the investor who purchases a foreclosure at auction. Check out our How to Buy Bank Owned Homes Guide for more about buying bank owned homes. Then, call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation conversation. We can help you determine which strategy will save you the most money and accomplish your main goal – getting into a home.
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