There are a variety of different types of auctions where you can find great wholesale properties. These auctions can be great places to not only buy great whoesale properties, but you can meet other cash buyers here too. The main thing to keep in mind is that you will need to come to these auctions with cash in hand. There are a lot of different ways that anyone can come to these auctions with cash. I will address those options in another blog post. For now, we need to go through the different types of auctions where you can acquire great wholesale deals.
- Foreclosure Auctions – In these auctions, the property being sold is one where the borrower was unable to pay their mortgage or violated their agreement with a lender. It is the way that the lender can recoup their losses. The property is sold to the highest bidder. Typically, the auction will take place at the county courthouse. The properties being auctioned off at the courthouse are normally bought sight unseen.
- Delinquent Portfolio Auctions – The properties that are auctioned off are properties that have been sitting in a lenders portfolio for longer than the average days on market or it is a property they want to liquidate quickly. The largest nationwide auction companies are www.auction.com, www.hudsonmarshall.com , & www.williamsauction.com. They will auction off portfolios of properties from Fannie, Freddie, HUD, & banks. They will re-list the property on the MLS, advertise it aggressively on their websites and all over the internet, they will do aggressive sign marketing, and email the information to their huge buyers list. Most of the time they will offer an open house a week before the auction will occur, if the auction is going to take place live. If the auction is going to be exclusively an online auction, they will offer a video tour available to prospective buyers online. The property is sold to the highest bidder.
- Tax Deed Auctions – A tax deed auction occurs due to a tax payer not paying their county/city property taxes. The county/city will have an auction monthly, quarterly, semi annually, or annually to liquidate the properties that have delinquent taxes. The county/city has statutes in place that offer them a way to recoup lost revenue from delinquent property taxes. They have the lawful right to place a lien (superior lien) against the property and within a predetermined timeframe they can sell the property at auction, if the property taxes remain unpaided. The property is sold at auction sight unseen to the highest cash buyer.
- Estate Auctions – These are auctions where a local auction company comes in to liquidate an estate property for the heirs. They will advertise the upcoming estate auction in a variety of different ways. They will allow potential cash buyers preview the property before the auction starts for the property.
- Private Auctions – There are local private auction companies that will help people liquidate their properites during a local auction or an online auction. They will market the auction heavily and require cash to purchase the properties.
The key to success when buying wholesale properties via auctions is to know the value of that property in that area right now. Most properties are going to need some repairs. The average wholesale property will need at least $15K – $25K in repairs. You need to take into consideration your holding costs to get the property on the market or rented too. If you take these things into consideration, you will land some great wholesale properites at these auctions.