Experienced real estate investors know that probate properties are some of the best investment opportunities on the market.
They aren’t always easy to find and the many investors seeking them out make it a competitive market in many cases. One way to get in the game is to learn how to buy probate properties at public auctions in IL.
How to Buy Probate Properties at a Public Auction in IL
Finding Probate Properties
Public auctions are not always exclusively probate auctions. Most are foreclosure or tax lien auctions meaning the property, whether owned by a deceased or living person, has failed to pay either the mortgage or properties taxes. Because of the broad nature of public auction properties, those interested in probate properties often consider other avenues to find properties before it hits auction.
That being said, if you know a property is in probate because of obituary listings or public information, making a play at auction might be your only bet. If the property has no heirs or the heirs are being forced to sell because they are unable to otherwise meet the debt demands of the estate, the property can be a good value.
Because real estate information is public information, you can easily determine if a property is a probate property. This information might allow you to make a play on the property before it goes to auction, giving heirs the ability to close the deal sooner than later and eliminating competition for you.
Research Prior to Auction
Any auction registration will clearly warn that buyers must do their own due diligence on the property prior to bidding at the auction. If you win, you own the property and all it’s problems.
Take the time to learn as much about the property, its condition and any liens or encumbrances as possible. Many auction properties are in poor condition, disrepair and in desperate need of rehabilitation – potentially costing big bucks. Additionally, perform research on any public liens such as mechanic or tax liens that you may still be liable for upon assuming the property. State and county rules do vary so do your research.
By doing all this research you will be able to establish a budget and a potential value of the house. This will establish the total budget to spend on the purchase at the auction. Remember, the purchase price plus the renovations should still give you plenty of wiggle room in a fluctuating market to turn the property around and flip it for a profit.
The Auction Process
Auctions move quickly and it is easy to get caught up in the frenetic energy of the room. Investors and banks with deep pockets have no problem bidding up property prices in an auction environment.
The trick is keeping emotions and competitiveness out of your bidding process. Make smart business decisions when bidding based on parameters set during your due diligence. If you are outbid, it wasn’t meant to be and know you are better off because you ran the numbers of where profits turned to losses.
Learn all the rules before the auction. You may be able to satisfy the bid win with a deposit fulfilling by full payment within 10 days. Some auctions require full payment at the end of the auction. If you aren’t paying cash in full, have the mortgage already approved and ready to fund immediately.