1. Set a price you are willing to pay before you go, and stick to it. Know the value before you go!
2. Look at the property before you go. Owners might still be there, so be respectful!
3. Take your 10% deposit, you keep it, but it shows your intent.
4. Arrange financing BEFORE hand. Hard money lenders cannot always close in 15 days that is required.
5. There are no auction fees. Unless you go to an auctioneer and not an attorney handling a foreclosure auction.
6. Read the legal notice about the sale, or about the attorney, sometimes they have certain guidelines to follow.
7. Go to a few first and get a feel, talk to the players there. Ask for recommendations of closing agents, title companies. Most buy with Credit Lines so they can close quickly.
8. Enjoy! And remember, not all properties that are quoted at a certain price, start at that price, sometimes banks will open the bid lower. And make sure the sale isn't cancelled first! If it's a good deal, I'll probably be trying to buy it before it goes to that auction!
Have fun! Buy low! Email me if you have any questions.
Before bidding, know what the homes are closing at. Bidding usually begins on what is owed, or a little below it. You do not want to get caught up in the excitement and overbid.
There are a lot of short sales and bank owned properties in the MLS. If you can wait for a response and do not have to move right away, you can get a great deal.
I listed a short sale in Kiln Creek for 269,900 (which was already 10k below comps) and the buyer got it for 220k. It appraised for 274k. The deals are out there, you just need someone to work with you to find them.
Best of luck !
You will need a cashier's check for the amount of the deposit so be sure to have several in different amounts so you do not have to give more than is required, if you do not close you loose the deposit.
You will want to have a loan pre approved pending only contract and apprisal. They take back up offers at auctions so again if you do not close then next guy will and you still loose your deposit.
The buyers premium is paid at time of closing so if the premium is 10% and the sales price is $200,000 unless you want to pay the premium out of pocket your loan approval will need to be for $220,000 and the value must be that as well. A good rule of thumb at auction is to pay no more than 75% of market value.
Make sure you know the value and have decided in advance how much you are willing to pay. Auctions can be exciting so do not get caught up in it and pay too much.
Hope this helps, you can reach me at 757-375-1777
Realtor, RE/MAX Allegiance
Virginia Beach, VA
You need to have your financing fully approved before you head to the auction so you need to find a good local lender who you can meet with face to face. Provide them all of the documentation they require. With everything in place they should be able to complete the appraisal and have loan documents ready within the 15 days.
Auction properties are not always the best deal and do leave you truely at the mercy of the lender. Have you fully explored looking at other REO properties? When you add the 5% buyers premium, the requirement to bring certified funds (more than you need with a standard REO) and fast close requirement, you may find that other properties are truely a better bang for your buck. In that case you do need a Realtor who has experience as a buyers agent working with REO's in your area. If you need a recommendation let me know.
P.S. Here is a foreclosure auction in the Charlottesville, VA area... very similar to what one would be like in this area: http://www.realcentralva.com/2008/10/17/this-is-what-a-forec