Happy New Year! Hopefully your year is off to a great start and your business is achieving daily goals. For the New Year our company made a point to do things differently, set big goals, and find new ways to achieve them. Having completed commercial, syndicated commercial, SFR flip, multi family, and buy-hold SFR deals in 2017 we knew we had to challenge ourselves in 2018 to achieve bigger goals.
Having explored a variety of asset classes with different ways to acquire each, we found the courthouse foreclosure auction as a new method to acquire great deals. We never bought a property at auction before but followed four key steps to show up like a pro, buy a deal, and gain equity just by closing the deal. This purchase highlights the saying: you make your money when you buy. I’m going to share with you the four steps you must follow to buy the infamous unicorn foreclosure deals from the courthouse auction. By the way, they aren’t unicorn deals. They are available to everyone but you need to do your homework before you show up so you can be a pro and win deals while the masses that show up sit on the sidelines to watch.
Step 1: Every county has a different process to handle the foreclosure auction. You need to google the county website you want to buy in and read up on their process. You also need to find the list of what will be auctioned, on what day, and where the auction is held.
Step 2: Once you have the list you MUST do your homework. Doing your homework means: find out why the property is on the list, google the property address, figure out if it’s a location you want to buy in, find out how much is owed on the house, search court records to see if there are any additional liens, determine the property specs (sq ft, type, condition, year built, etc.), and drive toeach proeprty you want to bid on to visually inspect the condition. Remember you are buying the property AS-IS, without a chance to have an inspector go through so be diligent. You might be able to get inside, talk to a neighbor, or talk to the owner that will be foreclosed on to get additional property info.
Step 3: Have your funds or financing lined up to close on the deal per the county requirements. Most counties require a quick timeline to close and don’t bend their rules for any reason.
Step 4: Show up for the auction with your final list of properties you want to bid on. Your property list should include all of your notes from step 2 including a max bid amount for each property. When you are at the auction remember to be cool, calm, collected, and act like a pro (even if it’s your first time). Bid on the properties you want and know that you’ve done your homework so you are confident in your max bid number. Make sure your max bid amount leaves you with a profit margin so your purchase strategy can be successful. Good luck and have fun!