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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To The Nursing Major

Is it all worth it?
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"You're going to feel like quitting. You're going to struggle. You'll have days where you'll wonder, 'what's it all for?'

You'll have days when people attempt to break you down, or challenge your intelligence, skills, and right to be where you are. You'll have moments when you question your own abilities, and perhaps your sanity - but you'll rise.

You'll rise because your strength as a nurse is not determined by one grade, one shift or one job - it's an ongoing journey of learning, honor, humility and a chance to make even the smallest difference in the lives of your patients."

Don't ever give up on achieving your dreams to be a nurse. Keep pushing forward, no matter how hard it is. Nursing is not an easy major. You will have very little, if any, time to do anything other than study. But just think about how great it will feel to connect with a patient, pray with them, and even save his or her life.

This will make all of the late night studying, weekly breakdowns, countless cups of coffee, and tests so hard all you want to do is cry, worth it. To see a patient's face light up when you walk in his or her room will make your heart melt and you'll know you chose the right major.

The kind of nurse you will be isn't based on a test grade, it's based on your heart for the people you are caring for. You may have failed a class, but don't let that ruin you. Try again and keep pushing toward your goal. Don't allow others around you to drag you down and tell you that you aren't good enough to be a nurse.

Show them how strong you are and that you will never give up.

There will be days when all you want to do is quit, I know I question my major more than once a week; however, there is a patient out there that needs you and your caring heart. You can do this, have faith in yourself that you can move mountains.

I will say that you definitely must have a heart for nursing.

Personally, I want to be a Pediatric Oncologist and work at St. Jude Children's Research Hospital. Just the thought of those precious children going through the hardest part of their lives, keeps me going so that I can be there for them. I want to be a light to my patients and their families during a dark time. When I feel like giving up, I just think about how many lives I have the chance to touch and I keep on going.

So when you feel like giving up, just think about your future patients and how you can make a difference, even if its only for one person. I love the quote from Katie Davis that states, "I will not change the world, Jesus will do that. But I can change the world for one person. So I will keep loving, one person at a time."

Even though this quote is about foreign missions, I believe it fits the mold for nursing as well.

Nurses have the opportunity to change the world for people every day. Just remember that, smile, don't give up, and keep pushing toward your goal.

Cover Image Credit: chla.org

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5 Things That ALL Millennials Get Wrong About Investing

Millennials tend to save more conservatively and our aversion to taking risks may prevent us from reaching our full wealth potential.

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Millennials get a bad rap when it comes to making personal finance decisions. But while we may enjoy our avocado toast, surprisingly enough, we're also saving more money than previous generations. We also tend to save more conservatively and our aversion to taking risks may prevent us from reaching our full wealth potential.

Here's what millennials get right about their money and where room for improvement exists.

1. We wait too long to start

Even though experts have long recommended starting an investment portfolio as young as possible, many millennials hesitate when it comes to opening their own trading accounts. This results in missing out on the opportunity to sit back and watch our money grow through compound interest.

Many of us utilize savings accounts but relying solely upon these avenues prevents us from letting our money do the heavy lifting for us. Most savings accounts pay relatively little in terms of interest, often less than 1%. Throwing all our money into savings accounts earns us mere pennies for each $100 we invest.

Instead, millennials need to harness the power of the stock market which provides far more in terms of long-term financial gains.

2. We overvalue cash

Because we came of age during an era of financial crisis, millennials shy away from the stock market. But this hesitancy costs us big time in terms of future economic freedom.

No reward comes without risk, and by far the easiest way to reap huge financial gains remains investing in high-yield growth stocks. The best time to take any financial risk occurs before age 35, before the expenses related to home ownership and child-rearing require more financial conservancy.

Stashing away a small amount of cash under our mattresses for emergencies can't hurt, but wasting valuable time simply saving for a rainy day impacts our long-term wealth. If you're hesitant about investing on your own, hire a qualified financial advisor to manage your investment portfolio.

3. We miss out on tax deductions

Failing to diversify investments means missing out on valuable deductions come tax time. While interest from savings accounts gets taxed at the same rate as ordinary income, the capital gains tax rate remains substantially lower.

In addition, certain types of investments, such as investments in oil and gas partnerships, allow taxpayers to take advantage of government subsidies to offset any potential risks to capital.

Millennials do themselves a disservice by failing to seize these opportunities, as experts predict no decrease in demand for these resources over the next few years.

Even making an additional contribution to a 401k or other qualified retirement account can offset tax liability but far too few of us take advantage of this potential tax-buster!

4. We don't do enough diversifying 

Even though one out of every six millennials possesses over $100,000 in assets, few take the time to adequately diversify their investment portfolio. A strong portfolio consists of a mix of high-risk, high-yield stocks, steady, reliable blue-chip stocks, bonds and other forms of property.

Failing to diversify costs us big time in the long term. No matter how much cash we stash away today, inflation remains a powerful force that decreases the value of each dollar saved over the life of our savings.

The only way to account for price increases due to inflation remains investing in the stock market, where gains have a reasonable expectation of keeping pace.

5. We ignore history

Many millennials, myself included, tend to panic when we hear news stories of the stock market rising and falling at breakneck speeds. Indeed, current fluctuations in the Dow tempt many of us to pull out of riskier investments in exchange for less risky vehicles such as bonds.

Savvy millennials, though, resist the temptation to abandon ship.

Historically, investments in the stock market pay off over the long term. Market ups and downs tend to balance out over time.

Despite saving more than ever, we millennials need to educate ourselves about the importance of building a diversified investment portfolio.

Being willing to take greater risks while we're young will lead to a wealthier, more financially free retirement down the line. We millennials must learn to make our money work for us!

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