Tips for Bidding on a House at a Foreclosure Auction

My father started bidding on foreclosure homes at auction about two years ago, and so far he's successfully flipped four houses at an 85% profit. While it might seem callous to profit from someone else's misfortune, one of the best ways to get into real estate investing is by bidding on houses at foreclosure auctions. If this is something you're considering, remember the following tips.

Follow Several Properties

It simply isn't logical to assume that following a single property will be rewarded with a great investment. Bidding on houses at foreclosure auctions is a tedious process, and you might have to attend fifteen auctions before you find a property that works for you. Some properties will attract several investors, meaning that the price will go up fairly quickly, while others will turn out to be less of a "deal" than you thought.

Before heading to foreclosure auctions, make a list of at least ten properties in your area that interest you. Contact the trustees or lenders to get more information about each property, and decide in advance which you are willing to pay more for. This will help you decide when to stop bidding on a property that goes too high.

Get Familiar

In addition to looking at the houses you are considering, you need to research the neighborhoods in which they are located. Successful real estate investors often stick to one or two neighborhoods exclusively to make sure they don't wind up with a property in an area where real estate doesn't sell. Decide where you are willing to attend foreclosure auctions, and avoid stepping outside your "comfort zone" as often as possible.

Many different factors affect the value of a specific property, including the local crime rate, the quality of the school system, access to public transportation and convenience to stores and malls. Bidding on a house at a foreclosure auction also means taking a chance on the area.

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