Auctions can be confusing for many buyers to navigate, but they can also be the ideal paths to homeownership at fantastic prices. Follow these tips and you’ll be a wise investor.
Do stay within your budget on auction day. Give yourself a pep talk before you participate that you don’t overbid. If several bidders drive a home’s price well over market value, it’s no longer a bargain. Find out in advance if there are any outstanding property taxes or liens that you’d have to pay for upon purchase. Research comparable sales in the area and the neighborhood itself. This leads us to the next “do”…
Do realize you’re buying the neighborhood, not just the house. It’s happened to the best of us. We see a too-good-to-be-true house online, only to see it in person and quickly learn we were right to worry. The neighborhood is awful. Whether it’s the actual neighbors, the houses, or perhaps the location, something is off. If only we could transplant the home itself, it would be perfect. While it’s tempting to worry about just your plot of land, you’re actually buying into the neighborhood. What happens there will affect your experience, and more importantly your investment. This also goes for buying the biggest house on the block. You may jeopardize your return on investment or have trouble selling in the future.
Do your research, check out comparable sales in the area, and maybe even reach out to the neighbors themselves.
Do shop around. As with any major purchase, don’t buy the first deal you stumble upon. Just like buying a car, choosing a college or even dating, take other options into consideration. You may find the exact house you’re looking for, priced right, with no repairs necessary (jackpot), but you’ll have to look for it. Comparison shopping leads to gold! And remember to decode the real estate ads for the homes you especially like. This is an advertisement, after all, and is meant to entice the buyer and minimize potential deal breakers.
Do consider long-term goals when buying. What are your intentions with this house (Home buying can be so much like dating!)? Is this strictly an investment property? Are you part of a growing family? Can you ever envision wanting a pool? Think about the home’s limitations and potential before making a purchase. What you want today may be different than what you need in the future. Likewise, don’t get distracted by furnishings or décor inside the home. Imagine the items you have and consider whether the spaces will accommodate your belongings.
Don’t skip out on the professional inspection beforehand. It’s worth it to find out what’s below the surface (literally). You may be blinded by the aesthetics or the great deal, only to find out later that you’ve sunk thousands into a money pit. Even if you’ve been down this road before and have some construction experience, a seller might have come up with a short-term fix to a major problem you’ve never encountered and wouldn’t think to check into. Let a professional do a thorough job to ensure there isn’t more than meets the eye. Having said this, it’d be wise to get inspections on multiple properties at the auction, so you can be prepared to bid on more than one.
Do factor in any repairs when bidding. Since you’ve had the inspection, you know what you’re in for, and maybe you’re OK with a fixer upper. Just be savvy about pricing with your newfound insight into the property.
Don’t go it alone! Hire a realtor to go with you. There’s a lot of fine print, rules and jargon when it comes to auction catalogues. Have your realtor look over all key documents with you before the auction. Be sure to read all sales documents in advance, as well. When you’re ready, Bodie Interests can get the ball rolling for you.