3 Tips You Need To Know When Buying Property At An Auction
Some investors who want to buy low and sell high might try their luck at an auction. But before going to an auction, there are key things you need to know first, to improve your chances of meeting your goal. Otherwise, you could end up in a bidding war and a good price might suddenly become out of reach.
What To Look For At An Auction
When you search for a property at an auction, you will often find properties that are below market value. I’ve noticed over time that most homes at the auction block are foreclosed ones. Banks are willing to sell these properties cheap in order to liquidate assets quickly. This is a great starting point for finding very good deals.
Best Way To Research On Properties
Working with a foreclosed home is always a good choice to think about when it comes to how to rent and offer homes to tenants for a profit. But in order to do this, you have to do your research on any property that might be of interest to you.
It’s difficult to tell the condition of these properties from a brochure. But many investors who make huge profits at auction sales are able to gather data on properties from other sources. They do so by tapping on their network.
There will always be someone who is a friend of someone who knows this owner who got foreclosed or what not. It’s usually during small talk when you can fish for information regarding properties at auctions.
These details can be valuable because some properties that look rubbish in the brochure may be actually in much better condition. So while the rest of the group look elsewhere and bid for the other houses, you may be able to buy decent properties at really low prices because you’ve avoided a bidding war.
If you’re not sure how to network with other investors, there are a lot of hosted gatherings dedicated just for networking with other property investors, agents and what have you. The best news is that these events are usually free. Regular meeting events I see frequently are the We Buy Houses Meetups, which is affiliated with Rick Otton, who does yearly investment courses like the Cash Camp Intensive. Then there are also events like the Property Investors Network, more commonly known as PIN meetings, with guys like Simon Zutshi.
Just get yourself out there and you’ll be surprised at how much info you can gather to help you with your property search.
Getting the Property At An Auction
When you attend a property auction, you will be placing your offer against other bidders. You must make sure you understand the overall value of the property while setting a limit on what you’re willing to spend. This is to keep you from spending far more than needed. Otherwise, you’ll only diminish your chances of making profit. What good is purchasing a property if you won’t be able to sell it higher than what you spent for it?
Obviously, any refurbishments should already be taken into account when setting your ceiling price. Moreover, you must also check the average house prices in the area, so you know just how high you can go when re-selling the property.
By arming yourself with the right data, you can increase your chances of snagging good deals and avoid disastrous overbidding.