Bidding at a foreclosure auction is not as simple as it seems to be. If proper guidelines are not followed while bidding you might get messed up in the rush to bid and end up in a disastrous situation. An experience of attending at least two auctions is required prior before making your first bid. Let’s discuss some of the dos and don’ts of foreclosure auction.

What should be done?

> You must possess a fine print of the auction catalog which should be studied carefully before attending the auction. There should not be a single line in it left unread. The terms and conditions must be read carefully because you cannot make claims later on after winning the bid. The sales document must be read and understood carefully. The buy agreement, the home inspection, appraisals and disclosures must also be read without failure. A flaw during the auction on your part should never happen because of carelessness while reading the catalog. You should have perfect understanding of all the details specified in it.

> Inspection of the property before the auction is of prime importance. This is the phase where you can give your desire to buy a second thought. A licensed home inspector must be hired and should accompany you when you go to inspect the house. Walk through the property with the inspector and gather information about the condition of the roof, flooring, plumbing, electrical wiring, appliances, water supply and other fundamentals. Get detailed reports from the inspector regarding the faults in the property and the amount that will be required to repair them. Based on your plans of handling the property after winning the bid, calculate the repair cost.

> Add the repair costs to your bid amount, as in most cases it is the responsibility of the buyer to make the repairs and renovation as required. Also gather clear information about the liens and liabilities against the property, the prices of which should also be added to your bid amount. You should spend ample time on finalizing the bid amount so as to prevent future hassles.

> There are two types of auction, absolute auction and reserve auction. Buyers usually prefer absolute auctions in which there is no reserved minimum bid and the highest bid must be accepted by the lender regardless of the price. Sellers, on the other hand, prefer reserve bidding, in which they have the right to turn down the highest bid if it is less than the reserve amount or the price of the property, so they don’t end up in a loss situation. One must have a clear idea about what type of a bid he is going to attend.

What should not be done?

> Accompany a good Realtor, attorney, or accountant when going to any auction. Never go alone and bid at an auction. Ask your Realtor to review the property and the detailed documents that you have collected before attending. It is good to have a discussion with the Realtor regarding these documents before making your bid.

> Excitement is a no-no while bidding. Getting over-enthused.is what leads to overbidding. Never act just out of ego to outbid your peers, which will only end up in you paying a high amount needlessly. Stay calm and relaxed while bidding and think twice before making a bid.

> Attending an auction for just one property is a waste of time and money. Do some research and select at least five to ten properties to bid on so that you have a higher probability of winning a bid. If you are prepared just for a single property, you will have to witness many auctions, which had you prepared for you might have won.

> Clarity in your plans and ideas are vitally important before making a final decision to bid. Changing your decision on purchasing the property may result in you losing the initial deposit or down payment or both.

Proper study and planning is essential in each step of foreclosure auction. The process of foreclosure auction should not be taken casually.

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When buying anything, you need to make sure that what you’ve just purchased is OK and fits all of your current needs and requirements. Homes are no exception. Whether you buy homes to resell for a profit, or for yourself, you need to close a good deal. If you decide to earn some money by investing in an estate, you really need to make sure whether that estate will or can be made good for your future client(s).

Since we talk about homes, we need everything into consideration. Where is the property located? When was it built? What is the actual condition of the home? How many rooms does it have? Is it in a good, bad or borderline neighborhood in regard to safety? Though discrimination is verboten, what is the ethnic diversity of the neighborhood?

The above mentioned are essential things to consider. You cannot overlook any of these and buy blindly. Think first, than decide.

Location, location, location

This issue is two-sided. If you are buying a property to turn it over for profit, it is advantageous for it to be in a central location, however, if the property is in a run down section and you can see drunks on the streets, stay away, unless you are looking to just rent it out.

What if a house just seems to be in a nice neighborhood, nothing uncommon, neighbors seem nice and friendly? You never know. Maybe a thief or a sex offender lives on the block. You should ask discreetly before buying.

Date of the Building

The year of building is essential, since building styles vary. You may have a certain preference for the kind of house you’d enjoy living in, or what kind of properties you’d like to sell, maybe to build a niche market in restoring and renovating.

Anyway, don’t just look on the outside. Check the interior too. What if walls have holes and rodents or roaches are present? Do you need that kind of problems? Exterminators can help, but rats can do a number on electrical wiring. If buying a house to live in, best to skip over clear infestations. Even if there are no mice and the walls are in good shape… what if the building’s structure isn’t at all stable? Have the house inspected by a qualified engineer.

Partitioning

Do you need the house for yourself? Very good, then you need to know how many rooms, kitchens, bathrooms it has. You also have to know how big those rooms are, and whether or not you would be able to comfortably live in them.

Or, are you an investor? No exception for you. You also have to find out the number of rooms, baths, etc… in that house. After knowing this information, you can start building your plan, and calculating your future monthly or daily income.

After considering everything related to the house itself, you have to start evaluating your budget and maybe family into account. Are you even ON a budget? Can you afford the mortgage payment. Do you have kids, a partner? If so, would they accept to move in there, with you? Could they be as happy in the new surroundings as in your current apartment or house?

If you’re an investor, it’s a different case. You should first of all think about what the market is like, what sort of individuals or families are your potential buyers. Is the school district good? That’s always a big plus. Is it the worst house on the block in an otherwise nice neighborhood? Some fresh paint and a new roof can work wonders.