3 Tips for Buying Houses from Online Auctions with Matt Faircloth | Mentorship Monday 077

Hey Youtube,

Today I'm going to give you a few tips for what to look for when bidding on properties using the online auctions.

To get started - I'm not going to read through the all the paperwork that was sent over, but I will point out a few interesting things that I noticed as well as provide you with tips moving forward. We've used online auctions to purchase many investment properties and here's what we've learned along the way.

Tip #1 Read the Fine Print.

It's important to always examine the fine print. For example, one thing that I noticed in your paperwork is that they don't allow e-signatures. Meaning that if and when you submit a proposal, it has to be printed and signed. What's important to notice about that is, if you were to print the paperwork with an e-signature, your offer would be rejected and you would have to do the process all over again wasting time and energy.

Also take the time to understand all the contingencies that are involved with that particular property like, inspections, financing, titles, etc.

Tip#2 There's usually a Homeowner Round

This homowner round is opened up to people who actually plan on living in the property. This stage does have some regulation around it, but it's not likely that someone is going to show up to your front door and make sure that you're actually living in the property. There are ways to get around this, but stay on the safe side and play by the rules. How to get around it? Contact the listing agent of the property, explain that you want to submit a bid as soon as the property opens up to the investor round. The listing agent will know all the rules and regulations and will be able to submit your bid as soon as that round opens up. This way your the first to bid on the property without having to constantly check to see when it opens up to investors.

Tip #3 Understand Some Properties have a Reserve Amount

The reserve amount is the dollar amount that the auction house, bank or property owner needs to get before they can sell the property. Reserve amounts don't always make sense, you might see a property listed for $30,000 but the reserve amount is $80,000. Why do they do this? They're collecting information from the market. They'll list at a low price and see what type of bids are coming in. If they don't reach the reserve amount, they'll take it down, lower the reserve amount and re post it. Basically, they're trying to get the highest and best offer from the market. Don't let this process frustrate you, instead know that they'll be pulling it down and reposting it with a lower reserve amount.

Hope this was helpful!

As always, please email us any real estate questions to HelpMe@DeRosaGroup.com and we will answer them on an upcoming episode!

Learn more about The DeRosa Group at http://www.DeRosaGroup.com or on BiggerPockets.com - https://www.biggerpockets.com/renewsblog/author/mattfaircloth/
Matt & Liz, founders of DeRosa Group, were recently second-time guests on the BiggerPockets Podcast.

Check it out: https://www.biggerpockets.com/renewsblog/bp-podcast-203-finding-deals-funding-contractors-mentors-matt-liz-faircloth/

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