In this article, we’ll take you on a journey to discover the hidden gems of the property market: auction properties.
You might be wondering, “What are auction properties, and how can they diversify my real estate portfolio?” Well, fret not! We’re here to break it down for you in the simplest way possible.
Auction properties are unique in that they offer a chance to acquire real estate through a competitive bidding process. They can be a fantastic addition to your investment strategy, adding an element of thrill and potential profit.
In the pages ahead, we’ll explore different types of auction properties, each with its own set of advantages and considerations. By the time you finish reading, you’ll have a better understanding of how auction properties can help you diversify your real estate portfolio and open doors to exciting investment opportunities!
Bank-owned properties
Bank-owned properties, also known as REO (or in other words Real Estate-Owned) properties, are homes owned by lending institutions. You might come across them at real estate auctions with the help of a real estate agent.
These properties went through foreclosure, didn’t find a buyer during the foreclosure auction, and now they’re priced to sell quickly!
The cool thing about bank-owned properties is that they are often sold “as is.” This means buyers can get a deal without a lot of hassle. The bank wants a smooth, quick sale, and that’s good news for you.
Plus, these properties usually come with a clear title, title insurance, and confirmation of their occupancy status. You can even visit them through open houses or private tours before the auction. Whether you want to fix and flip or find a rental property.
Non-bank owned properties
Now, let’s talk about a different kind of property – the non-bank-owned ones. These properties are not owned by banks or lenders, and they don’t follow the traditional listing process.
Instead, you’ll often find them on auction platforms. Non-bank-owned properties can be listed by various folks, like investors or real estate agents working with property owners who prefer the auction route.
The cool thing about these properties is that you can finance them or pay with cash. And, in some cases, you can even visit them before the auction, depending on the seller’s terms.
When you buy a non-bank-owned property at auction, the money goes to the owner, not the bank. There’s a buyer’s premium, which is usually either 5% of the purchase price or $2,500, and this covers the realtor’s fees. If you’re looking for flexibility and a different way to buy property, non-bank-owned properties might be just what you’re after!
Second-chance foreclosure properties
You might hear these properties referred to as “Second chance foreclosures,” “Claims Without Conveyance of Title (CWCOT),” or even “second chance CWCOT properties.” No matter what you call them, the program allows buyers to purchase these properties through cash-only online auctions.
It’s essential to know that second-chance CWCOT properties are sold just as they are, with occupants, and without any warranties.
But here’s the good stuff: these cash-only properties often close quickly and are priced below their appraised value. That’s a sweet deal for investors because they usually come with bigger discounts, and you don’t have to pay a buyer’s premium, which can save you some cash.
It’s a fantastic opportunity to score a valuable property!
Foreclosure trustee properties
When you think about auctions, you might imagine someone loudly selling items in person. Well, that’s more like what you’d see with foreclosure trustee property auctions.
These auctions are managed by a neutral third party who handles the whole foreclosure process. Depending on your state, this third party can be an individual, like a lawyer, or a business entity, such as a bank or a title company.
While some states allow online bidding for foreclosure trustee auctions, most are done in person. The auction details, like the date and time, will be posted in advance, but these times can vary from state to state.
Foreclosure trustee properties can be a goldmine for buyers looking for a good deal because they’re often sold for the amount owed on the property.
They have some advantages, too, like quick sales on the auction day, less competition because of the cash bid requirement. But keep in mind that properties set for a live auction aren’t always guaranteed; they might get pulled before the auction day due to changed circumstances.
This requires you to stay flexible and prepared!
Short sale properties
Short sales might sound like they’re about how quickly you can buy a property, but they’re actually about the price.
These properties are sold for less than what the seller owes on their mortgage, hence the “short” in short sale. This usually happens when the seller can’t keep up with their mortgage payments and needs the sale proceeds to repay the lender.
Short sale purchases are a lot like regular property buying, but they can take a bit longer because they need the lender’s approval.
However, they come with some cool perks for buyers, such as a guaranteed clear title, the chance to check out the property before the auction, the option to finance the purchase, and sharing the closing costs with the seller.
All of this makes short sales a fantastic way for buyers to snag a great property while saving some money.
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Bottom Line
As we wrap up our exploration of different types of auction properties, we hope this article has shed light on the exciting opportunities available in the world of real estate investment.
Whether you’re considering bank-owned properties, non-bank-owned properties, foreclosure trustee property auctions, or short sales, each option brings its unique benefits and considerations.
Remember that your journey in real estate investment can be as diverse as the properties themselves. It’s an adventure filled with twists and turns, and the more you learn and adapt, the more successful you’re likely to become!
Best of luck!
