Profile picture for cmariucci

I want to buy a home at auction what are some rules of thumb to look for regarding the condition o

  • July 27 2014 - Tampa
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Answers (8)

Profile picture for AlmaKee
Hi,

What type of auction?  If it's HUBZU then a Realtor will gladly assist you with your homework since they will be paid a normal commission.  If it's on a few other Real Estate Auction websites then a Realtor may be less enthusiastic because often the commission is reduced by .666%.

I have a lot of experience with REOs, HUBZU and the ins and outs of buying at the courthouse foreclosure and tax deed auctions.  Bottom line is at the courthouse auctions you need to pay a title company to do a title search before you even bid to be sure there aren't liens that will stick after closing.  Also you will find HOA and Condo associations that will foreclose their lien but the 1st mortgage sticks so eventually the 1st mortgage will foreclose.  

You need to learn the ropes before bidding and the learning process depends on the type of auction so let us know what venue so we can give you the best advice.

All the best,
 
Alma and Teresa

Sold On Tampa Team
  • August 20 2014
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Depends on what type of auction - Foreclosure Auction or an auction format that an agent or other entity is holding for the sale of the property.  Yes, visually inspect everything you can visibly see.  And if you aren't experienced with this, find a contractor or inspector to go with you.  In the case of a foreclosure auction or Trustee's Sale auction, you will not likely have access to the interior of the home and you are buying as-is with no opportunity to check these important things, so assume the worst when setting your price boundaries.  In some settings, be prepared to pay all cash - others will allow financing.  In some settings, the buyer will be required to pay some sort of a "Buyer's Premium" which typically I have seen somewhere between 5-10% of the sales price.  In the foreclosure/Trustee's Sale auction - check public records and the complete chain of title to see what is recorded against the property.  In some settings, you will be inheriting EVERYTHING recorded against the property and if there are liens, you will not be able to resell the property until the liens have been paid (not the mortgage liens, but everything else).  Also, you will want to try to determine if the property is occupied or not, and who is occupying the property, if possible.  If this is a foreclosure/Trustee's Sale auction, you will be inheriting whoever is living there and you will be responsible for legally evicting them.  If you are new to this type of sale, be very, very careful.

  • August 19 2014
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I've got a better alternative. Instead of "competing" for a house at auction (and being disappointed time and again) and waiting for the entire process to play out, then trashing it out to finally see what you've purchased, you should buy from a real estate wholesaler. 

There's a lot of competition for investment property right now.  If you are looking for investment real estate or just looking for a house at a great price, buy from a wholesaler.  They buy from auctions daily, and know better than anyone what a fair price is for a house.  You'll save yourself a lot of headaches and get closer to what you want faster than if you try to play the auction game.

We are a wholesale real estate company in Tampa - BTGH - Check out our list of properties to get an idea of what a wholesaler does and what you can get at an auction. 
  • August 19 2014
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Profile picture for user6064703
Mike & Eve: I've had many properties inspected when the electric was off, and the results were very useful.  One doesn't need electricity to inspect for termites, look at the foundation, inspect the roof, look for missing wiring, faulty venting for a water heater, mold, critter infestation, subpar additions, etc.

The question was "What does one need to look for condition-wise when buying an auction property."  The clear relevant expert would be a home inspector, not a real estate agent.
 
  • July 29 2014
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Home inspectors are good to have...if the electric is on which in many cases is not. 

Yes, you do need a seasoned agent that can help guide you through the nuances ( and value) of buying auction property...it is not all as it seems, and auctions are best left to those investors that have money to gamble.

I am wondering why you are set on just an auction property?  I am knee deep in showing/evaluating properties and think that a prudent buyer should look at all their options.  Regular sales and foreclosures may bring you a better deal.

Eve
  • July 28 2014
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Profile picture for user6064703
And I disagree with the "hire an agent" advice.  Real estate agents are not trained home inspectors.  It is not their job, nor their expertise, to evaluate the condition of a property.  If you hire someone, hire a home inspector.
  • July 27 2014
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Profile picture for user6064703
Depending on the auction, you may or may not have the opportunity to inspect the property beforehand.  If you do, focus on the expensive stuff: HVAC, roof, foundation, electrical, and plumbing.  Everything depends on price and and value, however.  If you are buying near market retail value, all of these need to be in good condition.  If you are buying as a fixer, they likely won't be.  Here are some tips:

HVAC: Look on the outside condenser for a manufactured date.  Within ten years is best, five is even better.  The inside unit usually will have been changed at the same time, but don't assume so.

 Roof: Three-tab shingles don't last as long as architectural shingles.  Roof life will depend on the part of the country you are in, and ratings given by manufacturers are typically too ambitious.  Look for shingles coming up at the edges, discoloration streaks on the roof, and sagging areas.  If you feel it is safe, walk on the roof to see if there are any soft spots.  Avoid old and damaged wood shake roofs unless you have $10k plus to repair it.  They are an insurance nightmare.
 
Foundation: Pier and beam is generally a bit cheaper to repair, but that can depend on the part of the country you are in.  Look for cracks at the top corners of doorways and windows.  Try to feel for any sloping as you walk across a room.  Stand in the corner of the room -- does it feel like you are lower than the rest of the room?  If it's a brick house, look for cracks in the mortar that form a staircase.

Electrical: Is the service panel maxes out?  Is it at least a 150 amp panel?  Copper wiring is best, but older homes may have aluminum.  That's fine in many cases, but you might want to have an electrician take a look at it.  There are ways of remedying aluminum wiring without doing a rewire.  If it's really, really old, it might have knob and tube wiring.  If so, plan on a rewire.

 
  • July 27 2014
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Profile picture for Chad Slayton
Hire an agent, they can look into the condition for you. 
Agents are paid by the owners so it wont cost you anything. 
  • July 27 2014
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