For specialists, securing bargains at real estate auctions is something for professionals; see the five main pitfalls that usually catch the amateurs. Many view real estate as a good investment, but admit that nowadays it is difficult to find promising prospects.They may be tempted to seek bargains at auctions. However, a layman should not go to an auction. Instead he or she should search for help from a professional third party or a professional service like ServiceLink Auction.
To find bargains at auctions, it is essential to be professional in the subject or at least to have an excellent legal expert advice. As an example, in two years, our team analyzed 2 thousand properties, to participate in the auction of 200 of them and cast 40 – 2% of the real estate analyzed.
Although auctions generate opportunities, offering real estate below market value, the chance of a layperson getting into a trap is excellent. Here are the top five “traps” in which an unprepared investor can enter through an auction of real estate:
1. Arrange a busy property and can not get rid of the occupant
This situation is quite common in properties that go to auction, but the bidder gets the right to request vacancy. However, the occupier can enter with resources, and even the execution of the property can be discussed in court – auctions can even be annulled.
So unemployment can drag on for years and end your plans to profit from that property. Occupied homes tend to be priced more, but the shot may backfire.
2. Underestimate the necessary reform
Properties that go to the auction can be in the very poor state of conservation, depending on the imbroglios that went through until reaching the extreme situation of being auctioned. Even if the investor visits the property before the auction – which is fundamental – he may have no idea of the extent of the necessary renovation. One must at least rely on the help of someone with experience in the subject to estimate the cost of the work.
3. Do not visit the property and buy an inferior quality productIncredibly, some people buy a property without visiting it before. But this is one of the worst mistakes an auction participant can make. The visit should be thorough and be accompanied by professionals who may detect problems that are not apparent. If the property is residential, and the landlord refuses to open the door for visitors, you need to see the location of the property at least and try to inquire with condo and neighbors officials about their conditions. If you buy a bad product, the investor will have a hard time reselling it, and you will have to pay for the condominium, IPTU and maintenance expenses. In the end, the lower price of the auction does not pay off.
4. Buy a property full of pending lawsuits and take time to return
Reselling a property bought at auction can be profitable, but it can take much longer than the investor expected. After an auction, there are still some pending lawsuits to be resolved. If the property is occupied, the occupant can get injunction not to leave, and the eviction can take years; also, the property owner will have time to appeal, and the auction may be canceled.