When someone says auction you probably think of a big barn with a fast-talking man and people flashing numbers while the man gesticulates wildly. While that portrayal is popular in TV shows and movies, real estate auctions in real life aren’t that way. And if you’re thinking of buying real estate at an auction you need to be prepared.

The best place to start is by attending an auction—one you aren’t planning on buying at. Find a realtor/investor who is experienced with the auction process and attend with them. Take notes and ask them lots of questions. Experiencing an auction for yourself can be a great way to learn about the process without exposing yourself to risk.

Another great place to start is with the auction house itself. Call the firm that is in charge of the auction and ask them questions. Often these kinds of firms will have websites, pamphlets, or other resources they can refer you to help you get started.

Make sure you read the auction terms carefully. There might be special rules or exceptions or the auction you are planning on attending may be a different type from others you’ve seen or attended.  Make notes about what auction terms say and jot down questions you have. Call the auction firm with your questions or start doing your own research.  You need to understand what you’re getting into.

Inspect the property. Once you know how the auction works you need to figure out if the property up for auction is the one you want.  The best phrase to describe this is “due diligence.” Get out there and see the property, inspect it to the best of your ability and then make sure to determine its value. Anything sold at auction is sold “as is” and it is truly a “buyer beware” situation.

Determine what you’re willing to spend. Identify your budget. This should include what you’re willing to bid for the property. Determine the absolute most you would be willing to pay for the property. This has to be a number where you are willing to walk away if the bidding goes even just $1 more. Stick to that number NO MATTER WHAT. Do not get caught up in the emotion of the auction or you will overpay. Have your acquisition capital in place and ready to go prior to the auction.

Get in the action! Auctions can be exciting and you will probably be surprised by something at some point in the process. However, if you’ve done your work ahead of time your investment will be a good one and you’ll be satisfied.

What tips do you have for success at a real estate auction?

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