Are you looking forward to the next auction now that you’ve found the perfect property to bid on? Do not get too excited; The home you’ve been hoping to buy may not come up for auction, even if it’s already scheduled for sale.
After attending our first few auctions, we realized that many homes scheduled to sell (including many homes we were planning to buy) were never mentioned. We often showed up on auction day with a short list of potential properties, only to find we couldn’t bid on a single one!
Over time, we learned that only 20 percent or more of properties set to sell at auction are actually auctioned as scheduled. This is due to the fact that foreclosure sales can (and often are) delayed or canceled for a number of reasons, including:
- the landlord paid the dues
- The bank decides to give the homeowner more time to pay or sell the home
- owner filed for bankruptcy
- The owner filed a lawsuit to slow down or cancel the foreclosure.
- house sold before auction
And this is not the only challenge when it comes to buying property at auction. Fewer than 50 percent of homes that sell on schedule go for what we consider an acceptable price.
So, these days, we never attend an auction without a great list of potential properties. If you’re planning on buying a property at auction, my advice is to first compile a large, well-researched list of foreclosures.
While this may seem like a lot of extra work, it often makes the difference between getting a great deal and walking away empty-handed. Plus, building up an adequate list doesn’t take time. He More work.
Below, I walk you through how to create your first foreclosure listing in five simple steps.
Connected: How to Buy a Foreclosure: Guide to Finding and Landing a Foreclosure Deal
Step 1: Find Your County Clerk’s Website
Legal notice is filed on each home set for foreclosure, and this notice is filed with the county clerk. In your state, the title may be something different, such as county recorder or recorder of deeds.
Regardless of what the authority is called, finding their website is the first step in building your list.
To find your county clerk’s website, simply search your county in Google with the word “recorder”. This is usually enough, but you can also call your county government office for information if necessary.
Step 2: Find the Foreclosure Notice
After you’ve found the website for your county clerk, the next step is to start looking for foreclosure notices.
Most states post these notices online. However, if online foreclosure notices are not available in your county, you will need to visit the county clerk’s office in person. While this is less convenient, the extra work required may mean less competition for you on auction day.
Assuming you are able to search for documents through your county clerk’s website, you can usually find relevant foreclosure notices with one of the following search terms:
- notice of sale
- notice of trustee sale
- notice of foreclosure
Keep in mind that each county is different and these websites change regularly. Not all counties make things easy, but this is Always It is worth checking online first for foreclosure notices.
When you receive a notice, you should be able to click on it to view the details of the foreclosure document.
Connected: The 5 Biggest Risks of Buying a Foreclosure at Auction
Step 3: Receive foreclosure notice data
Once you’ve figured out how to find foreclosure notices for your county, it’s time to start recording the data. The documents you find will contain detailed information, and most of it you’ll want to keep with you for later. At this stage, the goal is to get as much data as possible; You can always analyze and filter it later.
Here is some of the information you may find in a foreclosure notice:
- legal description of the property
- property address
- name of lender
- Loan Document Name / Number
- Scheduled Sale (Auction) Date
To make your life easier when it comes time to analyze this data, I recommend compiling it into a spreadsheet. You will add to this spreadsheet later because the foreclosure notice does not contain all the information you will need.
In fact, most notices don’t even have the full address of the property. To get that and other essential data, you’re going to have to dig a little deeper.
Connected: Buying Foreclosure at Auction: How to Avoid Overpaying
Step 4: Search and Find Your County Tax Records
Unlike most foreclosure notices, county tax records are complete when it comes to property address and owner data. This is public information, and in most countries it is available online.
So now, the next step is to find the tax records for the properties with foreclosure notices. It may take some experimentation, but you can usually find the relevant records using the information you added to your spreadsheet in the previous step.
Once you locate the tax records for the properties on your list, you’ll want to transfer the information they contain to your spreadsheet. Here are some examples of data you might want to capture:
- Full street address and legal details
- property tax status, including any delinquent taxes
- year of construction
- valuation information, such as valuation/market value
- Square footage and number/type of rooms
Connected: How to Find Foreclosure and Pre-Foreclosure Listings
Step 5: Find Real Estate Data Sources
Once you have everything you need from county tax records, it’s time to use sites like Zillow to complete your spreadsheet.
There are many online sources for property data, so you can start with a database of your choice. Keep in mind, however, that some sites may provide more complete information than others when it comes to properties in your county.
For example, Redfin may be best for your county. In others, Zillow may be better. Experiment a little and find the site that will work best for your purposes.
In any real estate data site, you can find an abundance of additional information to add to your spreadsheet, including:
- Estimated price
- estimated rent
- Square footage, number of bedrooms, number of bathrooms, etc.
- manufacture date
- Neighborhood data, such as schools, local amenities
- interior and exterior photos
- Mechanical and HVAC information
- Value and Tax History
At this point, it’s also a good idea to pull each property up on Google Maps to see the surrounding area. Sometimes, you may also see lot divisions to identify property boundaries. Use the “Share” feature in Google Maps to copy the link to the map. Finish your spreadsheet by adding these links for each of your properties.
After creating and filtering your foreclosure list, the next step is to perform a series of drive-by inspections. Viewing potential foreclosure purchases in person provides important information that you may not get any other way.
We cover drive-by inspections in detail in our BiggerPocket book, bid to buySo visit BigerPockets Bookstore if you’re interested in learning more about the process we follow to find and buy foreclosures at auction.
And check out this BiggerPockets article written by my co-author Aaron Amuchastegui. In this, he shares two experiences that show why investors should do the same. Always Do a drive-by inspection before bidding on foreclosures.
questions? notes?
Let’s talk in the comments below.
Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
