Your Complete Guide to Buying Property at an Auction

Your Complete Guide to Buying Property at an Auction

Homes are auctioned for two reasons: foreclosure and tax liens
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If you’re looking for a home, you likely want the best house for the least expensive price. After all, that’s the optimal way to maximize the size and amenities of the house considering what you can afford, right?

As you look around, it’s prudent to consider buying property at an auction. Auction properties can often be had for below-market prices.

Why? Homes are auctioned for two reasons: foreclosure and tax liens.

Why Homes Are Sold at Auctions

In a foreclosure, the property owner is unable to pay the mortgage to the lender. After a lengthy process of up to a year, the lender of the property seizes the property back from the mortgage holder who is in default. The lender then arranges for an auction and auctions the property off.

In a tax lien, the property owner has become severely behind in tax payments, either of property or state and local tax. In this case, the tax authorities, not the lender, seize the house and auction it off.

In both cases, the homes are being auctioned because of a previous homeowner’s financial distress. It is in the lender’s and the tax authority’s interests to get the home sold as expeditiously as possible so that the property can be removed from the lender’s books. Mortgage and tax payments begin again with a new homeowner.

It’s likely you have a number of questions about buying property at an auction. Here’s a complete guide to buying property at an auction.

1. Where to Find Properties

There are multiple ways to find properties up for auction. Check online, look at foreclosure listings or look on sites for the county or municipality records of property, which sometimes have lists of properties likely to go on auction. Many reputable auction companies are now online and have consultants to walk potential property owners through the process.

2. How to Examine the Property

It’s very natural for a prospective property owner to want to examine the property. Some auction houses set up open houses to potential buyers can do a walk-through. Others have records of maintenance that has been performed, such as pest and other housing inspections. Some listings of property to be auctioned may be very detailed. Others may not be accessible to walk through.

Most foreclosure and tax lists will contain addresses. It’s possible to drive by and look at the property before you bid.

3. What to Do Before Bidding

Before you bid, figure out what you can reasonably pay for the property. Calculate the mortgage payments, interest, property tax and any mortgage insurance. Add what you will reasonably pay for maintenance and upkeep to the property. Many lenders require prequalification before an auction, just as they do before approving a mortgage.

If possible, have inspections performed if they have not been previous to the auction.

4. Types of Auctions

There are two types of auctions. The first is called an “absolute auction,” and the highest bidder wins the property. The second is called a “lender confirmation auction.” In this, the winning bidder must have been accepted and approved by the lender before the auction.

In other words, in a lender confirmation auction, the highest bid may be $300,000, but it will not be a winning bid unless the lender has accepted and approved the offer. In an absolute auction, if the highest bid is $300,000, it will win the property.

5. Where Do Auctions Take Place?

Many auctions now are held online. Others take place at courthouses, sheriff’s offices or hotel conference rooms. It’s a good idea to attend auctions before going through one in which you plan to buy a property to see how they work.

6. What Are Average Auction Prices?

For foreclosure auctions, a starting price may be the amount still owed on the mortgage. It also may be priced lower to facilitate buying, depending on the lender’s eagerness. By law, lenders cannot realize a profit beyond what they are owed in a foreclosure sale. Many foreclosure and tax lien auction properties are sold at a loss. Search auction lists and online sites to get an idea of the prices for existing properties.

7. What Do I Need to Bring?

Many auctions require you bring a cashier’s check for the down payment to the auction. Be prepared to pay earnest money and any fees associated with the auction. After that, if yours is the winning bid, you will have to pay closing costs and other fees just as you would if you were getting a mortgage through a lender without an auction.

Auctions can be a way to buy houses for less than they are worth, which is a good method for maximizing the amount of house you get for the money you can afford. Whether you are looking for a forever home or are in the market for something to flip, auctions can expand your options.

Cover Image Credit: Pexels

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I'd Rather Be Single Than Settle: Here Is Why Being Picky Is Okay.

They're on their best behavior when you're dating.
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Dating nowadays described in one word: annoying. What's even more annoying? when people tell you that you're being too "picky" when it comes to dating. Yes, from an outside perspective sometimes that's exactly what it looks like; however, when looking at it from my perspective it all makes sense. I've heard it all, "He was cute, why didn't you like him?" "You didn't even give him a chance!" "You pay too much attention to the little things!"

What people don't understand is that it's OKAY to be picky when it comes to guys. For some reason, girls in college freak out and think they're supposed to have a boyfriend by now, be engaged by the time they graduate, etc. It's all a little ridiculous; however, I refuse to put myself on a time table such as this due to the fact that these girls who feel this way are left with no choice but to overlook the things in guys that they shouldn't be overlooking, they're settling and this is something that I refuse to do.

So this leaves the big question: What am I waiting for?

Well, I'm waiting for a guy who...

1. Wants to know my friends.

Blessed doesn't even begin to describe how lucky I am to have the friends that I do. I want a guy who can hang out with my friends. If a guy makes an effort to impress your friends then that says a lot about him and how he feels about you. This not only shows that he cares about you but he cares about the people in your life as well. Someone should be happy to see you happy and your friends contribute to that happiness, therefore, they should be nothing more than supportive and caring towards you and your friendships.

2. Actually, cares to get to know me.

Although this is a very broad statement, this is the most important one. A guy should want to know all about you. He should want to know your favorite movie, favorite ice cream flavor, favorite Netflix series, etc. Often, (the guys I get stuck on dates with) love to talk about themselves: they would rather tell you about what workout they did yesterday, what their job is, and what they like to do rather than get to know you.

This is something easy to spot on the first date, so although they may be "cute," you should probably drop them if you leave your date and can recite everything about their life since the day they were born, yet they didn't catch what your last name was.

3. How they talk about other women.

THIS IS CRUCIAL FOR FINDING A NICE GUY. It does not matter who they're talking about, if they call their ex-girlfriend crazy we all know she probably isn't and if she is it's probably their fault. If they talk bad about their mom, let's be honest, if they're disrespecting their mother they're not going to respect you either. If they mention girl's physical appearances when describing them. For example, "yeah, I think our waitress is that blonde chick with the big boobs." Well if that doesn't hint they're a complete f* boy then I don't know what else to tell you. And most importantly calling other women "bitches" that's just disrespectful.

Needless to say, if his conversations are similar to ones you'd hear in a frat house, ditch him.

4. Phone etiquette.

If he can't put his phone down long enough to take you to dinner then he doesn't deserve for you to be sitting across from him. If a guy is serious about you he's going to give you his undivided attention and he's going to do whatever it takes to impress you and checking snapchat on a date is not impressive. Also, notice if his phone is facedown, then there's most likely a reason for it. He doesn't trust who or what could pop up on there and he clearly doesn't want you seeing. Although I'm not particularly interested in what's popping up on their phones, putting them face down says more about the guy than you think it does.

To reiterate, it's okay to be picky ladies, you're young, there's no rush. Remember these tips next time you're on a date or seeing someone, and keep in mind: they're on their best behavior when you're dating. Then ask yourself, what will they be like when they're comfortable? Years down the road? Is this what I really want? If you ask yourself these questions you might be down the same road I have stumbled upon, being too picky.. and that's better than settling. :)

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11 Financial Tips For College Grads Who Don't Know Where To Start

Most people learn how to navigate their finances as they go, at the cost of making several mistakes and starting good habits later than they should've. Don't be like most people!

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Adulting is hard, especially when it comes to money. If you're like me and you took a personal finance class in high school or college, you probably don't remember much because the information wasn't relevant to you at the time. Well, now you're almost done with college and you're ready to be welcomed into the real world as a freshly-minted adult. Suddenly you realize that class was probably one of the most important classes you ever could've taken.

Here are 11 tips to start making money moves today.

1. Start building your credit

It may not seem important now, but it's a good idea to start building your credit early. In three to five years or so, when you're ready to apply for a car or home loan, you're going to want to be approved to get the best interest rates, and that means having a credit score of at least 760. See tips two and three for more on how to increase your credit score.

2. Open a credit card if you don't have one already

One huge factor in your credit score is how long your oldest credit card account has been open, so you want to make sure to start early. A first card many people get is called a "secured" credit card, which basically acts like a debit card so the bank knows you won't go all "Shopaholic" and max it out. Make sure to pay every single one of your monthly payments on time and in full. No excuses, no exceptions.

3. Make all of your student loan payments on time and in full

JUST DO IT.

4. Embrace the concept of paying yourself first

Paying yourself first is a concept that many millionaires, even billionaires, swear by. Decide how much of your income you want to save. Then set up a portion of your paycheck to deposit directly into your savings before you can even think about it. The rest can go to your checking account for spending on bills, food, rent, and other expenses.

5. Build a three- to six-month emergency fund

Did you know that 33% of Americans would struggle to pay $1,000 in an emergency? This is a serious issue. You don't want to ever experience living "paycheck to paycheck," let alone have a minor crisis throw your life upside down. That's why you're going to build this emergency fund before you do anything else with your money. Think of this fund as something that you can't touch until you absolutely need it. If and when that time comes, you'll know, and you'll be so grateful that you were smart and were prepared.

6. Open a Roth IRA

There are so many things to be said about Roth IRAs and why you should get one as a new college graduate. In short, IRA stands for Individual Retirement Account. A Roth IRA is unique because any money you put into it is taxed now, so you won't have to pay taxes on it when you're retired and ready to use it. The main benefit: you also won't have to pay any taxes on the money you earn in the account. In addition, because you're young, you get to take advantage of the power of compound interest for a long time before you retire. This could potentially earn you hundreds of thousands of dollars. The best time to open a Roth IRA was yesterday. So go do it now!

7. Contribute as much as possible to your 401k

A 401k is basically an investment bank account that you can't use until you retire, and it will be taxed once you start using it (so it is not taxed now). Many employers offer 401k matching, and they open one up for you when you start your first job. If your employer offers 100% matching up to 6% of your salary, that means that if you can afford to put 6% of your income into your 401k, your employer will also contribute the exact same amount. Listen to me: this is free money. I like free money. You like free money. Take it.

8. Open a high-yield savings account

This is 2019. Don't keep your money in cash or in a regular savings account, where it'll depreciate 2-3% in value every single year it sits there. Get yourself a high-yield savings account, in which interest rates are anywhere between 2.0 and 2.25%, and watch your money make money while you sleep.

9. Start tracking your spending

Since it has become much easier to make quick and painless purchases these days, you should definitely be aware of your spending. I personally like to use a free app, like Mint, that does all the work for you because it puts all of your financial accounts (ie. savings and checking accounts, investments, loans, assets, etc.) into one place.

10. Create a monthly budget for each of your spending categories

These include food, housing, transportation, entertainment, subscriptions, health and wellness, and maybe more. You should know the things you always buy on a monthly basis and how much they typically cost. Comparing your budget to what you really spent after a month will show you exactly where your weaknesses are. Try to stay at or under your budget for each category every month unless there's an unusual event, like a vacation or a car repair.

11. Learn the basics of investing

Compared to the other tips on this list, this is one you can put on the back-burner for a bit. However, that doesn't make it any less important. It's critical for everyone who is financially independent to understand the basics of stocks, bonds, Exchange-Traded Funds, Mutual Funds, REITs, and more that you can use to diversify your portfolio, including in your new Roth IRA and 401k!

What are you waiting for? Up your financial game!

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