How to make money at a real estate auction

Real estate auctions happen daily and investors can make money, if they buy wisely. Not every home at an auction will make you money, so careful research must be done prior to the sale. Auctions are exhilarating and some people will get caught up in the excitement. In order to make money on auctions, never over bid your predetermined price. Learn more how to make money on auctions.

Auction home and cheap properties

Before you can bid on a home at an auction, you must do a thorough check of the property. Auction homes generally will be in bad repair, due to angry owners losing their investment. Cheap properties will have multiple bids on them. You must have a full title report allowing you to see how many liens are on the property and any legal problems that must be addressed, like tax and mechanics liens. Auction homes are repossessed homes and not all auction homes will be sold. The bank will place a minimum bid and if no one bids over that amount, the bank will keep the home, and it then becomes a bank owned home, not a foreclosure home. Houses up for auction will be advertised ahead of time and you may not be able to see the interior, so always plan for the worse scenario. You must realise also that evicting the owner may not be so easy to do.

Making money on auction homes

Once you have the owner evicted, it is time to begin to repair the home as quickly as possible. The longer it takes to repair, the longer it will take you to make your money. You have to make mortgage payments during this process and continue to make mortgage payments until the home is resold and the new buyers have closed their deal. You must have your workers lined up ahead of time. You cannot buy a home and then hope to find a cheap roofer. Run down houses need lots of repairs and this requires electricians, plumbers, roofers, cabinetry and lawn maintenance crews. Once the house is finished, you will need to find an estate agent that will be able to sell the home quickly and who has a record of closed transactions. Repo houses need time and they need lots of money to invest.

Flipping an auction home

Flipping a home is where you buy to resell. You renovate, sell the home and use the profits to buy another home. This is the way to make money. A smart investor will not invest in two or three homes, not just one. He will take a variable rate mortgage to keep his payments low and place as low a down payment as possible.