OfflineBe very careful not to get swept away at auctions. Most bids that are won are usually rejected and sent back to the auction block. You might think that great deals are being made, but the devil is in the details. Banks are behind this sinister way of selling properties. You see, all those properties at auctions are bank owned (REO). Banks place a minimum reserve amount on each property, usually no more than 10-15% off FMV, and that's only because it's probably in need of major repairs. When the winning bid is presented to them they can reject it without impunity because it did not meet their reserve amount. The unsuspecting bidder thinks he won and goes home with a wide smile, only to get a call the next day informing them of the rejection. The naive observer starts to salivate at all the great deals and wants in on the action.
By the way, those who actual buy at auctions, well they pay almost what the FMV on the property is. They do not get deals. Banks say yes only to the ones that meet their reserve. No reason for banks to give away things that they will lose money on.
We always hear that banks are not in the property management business, but think about, banks are also not in the money losing business either. They employ the best and brightest MBAs to make them money, not give it away at some loud-mouth-carnaval-style auction.
Auctions are nothing more than hype!
At least tax auctions do not have the reserve.
Not only do you need a walk away price, but is is always a good idea to have someone on the outside feeding you current FMV on each property. Most experienced buyers at auction these days are on the phone the entire time with someone doing research online so they can get accurate numbers and know where they should be on each property.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
When I first got into this idea I thought about the auctions. I have since found out exactly what your saying. Tax Lien auction probably the only way to go here.
Fantastic point jjensen. That type of auction bidding requires a combined effort of internet research and time on the ground getting accurate numbers.
I dont think I will waste my time and efforts there. However, I will keep checking the tax auctions to see what comes up.
When one sets out to take Rome, TAKE ROME!
Greatness courts failure.
Good point. You have to do the math because it's easy to get swept away with the fast paced frenzy. Even experienced investors sometimes get caught up in the whirlpool.
JJensen has said it correctly, do not get swept away. Have the walk away price. But, what else can you go to an auction for? Buyers and financing. If someone bids at the auction chances are they are buyers. Why not talk to them and get their business cards? What kind of financing do they use? Often the buyer has cash or is using someone else's cash. Why not ask if they (the bidder / buyer) will lend you money or even tell you who they use?
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125