At a recent auction in El Paso, Texas, I noticed that many bidders were pulling real estate information from the Internet when the trustee called for an address. Many of them used Google Street View to look up their homes when they were put up for auction.
In most cases, this was the first time these enthusiastic investors had seen a property, and they were bidding regardless.
Warning: Google objects are different from what you see
I understand why someone might choose this. After all, loading street images from Google Maps or Google Earth takes less than a minute. Driving a car for face-to-face inspection can take quite a long time, especially for those who buy real estate outside their home county.
However, we also know that these time-saving shortcuts can be costly.
That day, as I glanced over the shoulders of a bidder, I noticed the house he was looking at on Google Maps. It was a property that my team had been driving every month for almost a year. As you may know, the foreclosure process can be delayed for a variety of reasons. The auction for this particular home was delayed every month. Still, we stuck to the process and continued to include it in the drive-by inspection rotation.
Most months, this house looked more or less the same. However, recent tests did not show the house at all. Was demolished..
Here’s the house, and an image captured from Google Street View is next to a recent photo taken by a member of our team.
If you rely on old, easily accessible online information as the sole source of property data, like many bidders at auctions held in El Paso, you are taking great risks when bidding. The above example is a bit extreme, but it shows why buying an invisible property at an auction is a bad habit.
Dig deeper than the competition
Drive-by testing isn’t just about reducing risk. It is also an essential tool for gaining an edge in auction competition.
Unlike the bidders described in the sections above, experienced investors typically perform due diligence and set bid prices at auctions accordingly. However, if you want to dig a little deeper than in most cases, you can find opportunities that others may miss.
I found such an opportunity in North Sakurament a few years ago.
The property is in a high-end area and can easily be turned over if you can get it at the right price. It’s not far from the house I lived in at that time, so I decided to do a drive-by inspection myself.
When I got there, I found the house to look good, at least on the outside, like everyone else in the block. Instead of just taking a few pictures and driving away, I decided to investigate further. After knocking and waiting for a while without any answer, I walked to the window and looked inside.
At first glance, everything looked great, but part of the house looked unusually dark. After a closer look, I found out why. There was a fire.
Instead of writing down the property here and there, I took a closer look and came to the conclusion that the damage wasn’t too bad.
When the day of the auction came, other investors were clearly aware of the damage caused by the fire. Almost no one wanted to bid.These investors some It’s my homework, but I don’t think it looked good enough to actually measure the extent of the damage. Having witnessed the fire damage with my own eyes, I was convinced that if I could buy it at the right price, I would have completed the necessary repairs and still be able to make a considerable profit.
There was little competition, so I bought the property at a great price that day. And, as I suspected, thanks to a little extra due diligence, all that was needed to prepare for resale was a little help from the fire recovery company and the new paint coat.
The deal was so profitable that I immediately decided to buy another foreclosure that was known to have been damaged by the fire.
Before bidding (or canceling) a foreclosure at an auction, do due diligence and find time for a drive-by inspection. With this simple procedure, you can prevent costly mistakes. In addition, it will give you the additional edge you need to secure a low cost property with ample profit potential.
of Bid to buyThe next book, co-authored with David Osborn, gives an overview of the entire drive-by process. When All other steps we take to investigate and buy foreclosures at auction.Get a copy now Bigger Pockets Bookstore..
Did you buy the property at the auction? how was it?
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