What’s two stories tall, covered in long green fur and smells like old, wet dogs? For a lot of people, that would be their mental image of an investment house. The truth of the matter, though, is much more complicated. Certainly, there are investment properties so dilapidated that it’s hard to imagine anyone living in them, but many, many more are in fairly decent shape.
You can use a real estate agent to help scope the good ones out, but frankly, you’ll get first dibs at a lot of the best units if you spend some time haunting the post-foreclosure auctions held both online and off. No more green shag for you!
When it comes to a foreclosure auction, there’s really just one way that a property ends up on the block: someone doesn’t make their payments and the bank seizes the real estate securing their mortgage. For most mortgages, this means the former owners were more than 90 days past due. This could be because they couldn’t afford the house anymore due to some major life change, or maybe they just sent their bank “jingle mail”.
Jingle mail was really common during the Great Recession and the steep decline in real estate values that resulted. Homeowners would realize they couldn’t afford their adjustable rate mortgage when its interest rate reset and since they couldn’t refinance, they’d end up there sooner or later. Others just knew how far underwater they were and weren’t willing or able to hang on until they were righted.
The point of all of that was to demonstrate that just because a house goes to foreclosure auction doesn’t mean that it’s going to be a total nightmare. There are lots of nice properties that have been thoughtfully and strategically abandoned. The trick is figuring out how to tell them apart from those that are basically ready to be pushed over with a bulldozer (and a real estate or appraisal expert can help you with this in a big way).
There’s a lot to learn about buying houses at post-foreclosure auctions, but if there were just three pieces of advice to offer, these are probably the most important:
When you’re walking into a new venture, like buying homes at auction, it’s important to surround yourself with experts who can help guide your first few transactions. After all, learning the hard way is a lot more expensive than learning from people who deal with homes for a living. Where would you find someone like this? Look no further than your HomeKeepr community. All the experts you could ever need are there, housed together, under the same digital roof. Just ask your real estate agent for their recommendations. Happy bidding!