Buying Seized Real Estate
Buying at Government Auctions IV
PoliceAuctions.com lists information on many types of foreclosure, bank-owned, and government auctioned properties. Typically, these listings are not for the first-time home-buyer for a number of reasons. First, the transactions are more complex and you don’t have a licensed Real Estate Agent representing your interests, someone who will take the time to explain everything to you. Second, you need to have a good idea of the market value of the property in order to form a reasonable bidding strategy, and unless you have been involved in recent transactions in the area, you may be missing critical information. Knowing how long the average time on market for property in the area is also a good indication of liquidity, and it is information a Realtor could provide. A lack of information could be devastating to a first-time homebuyer or investor. Also, finding a lender who will cooperate with the transaction might tricky for those without the right collateral or previous home-owning experience. These homes are also sold “as is where is” without a home warranty, which typical cover mechanical defects in the first year. If you buy a home through government auction, you are on your own.
For seasoned homeowners and investors, buying Real Estate through government auctions represents an opportunity to get property at below market prices. When we were in the heart of the real estate boom, many properties sold by government auction sold at full market value because there was such feeding frenzy on properties. The boom also created a bigger pool of investors, in other words more bidders, and this also drove prices up. But now that prices have cooled, people will be less likely to speculate, and as the market loses steam, bargains will appear again. Of course if the market loses steam completely, and Real Estate values start dropping across the board, the investment will lose liquidity, which means investors will either be stuck in the property or forced to sell at a loss. This introduces the concept of risk into the equation, so like we said, this is better handled by seasoned Real Estate buyers.
Buying and selling homes for profit is a subject worthy of a book, and in fact we recommend visiting your local Barnes and Noble bookstore to find a book dedicated to teaching you the ins and outs of successful Real Estate investing. Combining that knowledge with the sources for foreclosure and seized Real Estate that you will find on PoliceAuctions.com will provide you with a full set of investment opportunities.
Always watch out for encumbrances on any property being auctioned by the government as some properties, even if seized by the IRS, may have note-holder who is in second position. What this means is once the government has disposed of the property, the mortgage-holder, typically a bank, will demand payment on the note or foreclose on the property. For example, if a property you purchase at Government Auction for $25,000 has a $650,000 mortgage balance due on the property, the total cash price is really $675,000.
Whenever possible, we include phone numbers for auctions in our database, so don’t be afraid to use them. The people on the other end of the phone are typically happy to answer your questions because they want to generate more bids for the property.
