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How to Weigh Fix Up Costs At Foreclosed Home Auctions

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Published: Wednesday, September 16, 2009

Foreclosed home auctions often list houses in need of more than just a little TLC. Unless you are a professional investor it is often hard to tell if a house is worth the minimum auction price and it may be difficult to know where to turn for help when making the decision to buy bank homes at auction. Here are a few tips to help you decide if that Southern California foreclosures auction is right for you:

  1. Bring a licensed home inspector with you to view the property - remember that inspection dates are set prior to the auction date and they are generally only one or two days set aside for prospective buyers to view the property. Watch the real estate auction website for details on when these dates are and be sure to bring your home inspector with you. Make sure they know you want to them to perform a pre-purchase home inspection and tell them when you need the report by.

    Most inspectors understand the basics of foreclosed home auctions and know that a fast turn-around is essential to your bidding decisions. Be prepared to pay your inspector the going rate for escrow-based home inspections. After all, you want all the same information and perhaps even want it sooner than you would during a traditional 90-day escrow period.

  2. Review the inspection report carefully - ask for clarification on any items you don't understand, particularly those dealing with electrical wiring and the roof. Once you have the report in hand, you will be able to determine which items need repair immediately and which items are merely cosmetic. Broken windows and cracked cabinets can wait. Aluminum wiring dating back to the 1940s and dry rot among the roof trusses cannot.

  3. Consult with contractors - again, unless you are a seasoned investor with in depth knowledge of the construction trades, consulting with the appropriate contractors regarding the improvements will help you get a better understanding of the costs associated with fixing your foreclosures auction purchase. If your inspection report indicates sagging roof trusses, call a roofing contractor and have them provide you with a rough, ball-park figure. If the report suggests major plumbing issues, call a plumbing contractor and ask how much to repipe the entire house.

  4. Do the math - these outside figures will allow you to calculate the improvements necessary to make the foreclosed home auction purchase habitable, which you can then add to the bid price to determine if the home is a good investment or not. Rule of thumb - if the improvements are strictly cosmetic, go for it. They don't need to be made right away and are generally less expensive than major improvements. If the item is major, such as a roof or new wiring, consult with a contractor and fully calculate the costs before placing your bid.

Other Recent Articles

Home Buyer Tax Credit Extended Until April, 2010

Category: Recent Articles

Published: Thursday, December 10, 2009

The federal tax credit has been extended to April, 2010, including an expanded benefit to existing home owners who sell their homes and then repurchase a new primary residence valued at $800,000 or less. This could be the perfect opportunity for buyers who wanted to cash in on home auction bargains but were fearful of lower resales on their existing homes.

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The Southern California foreclosures market may be shifting, with fewer homes entering foreclosure than in previous quarters. However there are still 57,000 existing foreclosures statewide that need to be sold, and lenders are looking at foreclosed home auctions as a major tool to sell large numbers of foreclosures in a short amount of time.

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Southern California foreclosures still account for the bulk of area homes sales and lenders are finding real estate auctions the fastest and most efficient method of clearing their books of REO properties. Buying a home at auction requires a little prep work, however and the experts at homeauctionexpo.com share their insight on how to find the best auction properties.

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About this Page: Foreclosed home auctions often list houses in need of more than just a little TLC. The experts at homeauctionexpo.com explain how to tell if a house is worth the minimum auction price and where to turn for help when making the decision to buy bank homes at auction.