When the Hammer Strikes...

Have you ever bought a property at an auction? Did you know that you can get a great deal at an auction?

Here are some basics about purchasing real estate at the courthouse steps.

A property is foreclosed when the owner fails to pay his mortgage installments or has unpaid tax obligations to the Government. A property is foreclosed when the owner fails to clear his tax liability for three consecutive years.

Once the property is foreclosed, it is auctioned in a bid to recover the lender’s unpaid loans.

The minimum bid is often the amount due to the lender.

Typically, the property to be auctioned is occupied by the owner. Therefore, as an investor you may not be able to view the property before the auction. Properties are auctioned when the owner is unable to pay his dues. Thus, you cannot expect a well-maintained property. It may be in a distressed condition. It goes to reason that if they can not pay their taxes they most likely cannot pay for repairs and upkeep of the home. While some of them require cosmetic repairs, others may require extensive repairs. A smart idea is to conduct research about the property to understand the true condition and the magnitude of repairs required. Also, conduct a research on the neighborhood and the prevailing prices for similar properties. You can also ask the auctioneer to arrange for a viewing of the property. Do so with a professional, who can evaluate the repairs cost.

Avoid falling for the bidding game. You might bid higher than the others to acquire a promising property. However, it is a better to assess the value of the property and set a limit before going to the auction. It is better to stick to a limit on your spending.

Purchasing Dallas investment property at an auction is definitely a good option. However, learn the tricks of the trade before bidding at one.