10 Must-Knows About Buying Real Estate Investment Properties at Auctions

If you’re interested in buying real estate as an investment, you should know the local MLS isn’t your only option.

Real estate auctions are growing in popularity, especially for people looking for a bargain. Experienced investors often buy properties this way, but technology has simplified the process and has made it less intimidating to new investors—as long as you do your homework.

Over the past 3 years, I’ve bought 8 houses from online auctions on sites like auction.com, homesearch.com and hubzu.com.

There are two types of real estate auctions: live (in-person) and online. Online auctions are becoming more and more popular as people grow more comfortable with making major purchases online.

Live Auctions

Live auctions in real estate, really? Yes – they exist. You go to a local courthouse or county fairgrounds. These are also a great place to meet investors and private lenders – surprising, right? It’s true. I’ve found that many investors who have a lot of cash, but no drive to work hard and seek out good deals on the MLS, hang out at live auctions.

Here are a couple pointers I put together for you when bidding at a live auction:

  1. Drive by the property, if possible – Most live auctions expect you to bid blindly on properties which can sometimes be risky in that the investor is unaware of the condition of the property being bid on.
  2. Get your finances in order – You must have at least 10% of the price upfront in a non-refundable deposit. If you end up not buying your property, you end up losing your deposit.
  3. You’ll probably need the remaining 90% by next day – At some auctions, if you do move forward with purchasing a property, you have to have the remaining 90% the NEXT day.
  4. Set Your Max Offer Price – If you happen to be able to check out the property so you are not bidding blind, set your max offer price and bid until you hit it.

Live auctions are not a method I use regularly because I hate bidding blind, but there are definitely some deals to be found at them.

Where Can I Find a Live Auction?

Like I mentioned before, you can usually find live auctions taking place at the local courthouse or at the county fairgrounds. The three live auctions I would look for are:

  1. Hilco Auctions – Hilco hosts live and online auctions in various different locations. Check out their upcoming auctions here.
  2. Auction.com – Auction.com also hosts online and live auctions – you can check their calendar and search by state here.
  3. Sherriff’s Sales – In my state of Ohio, we sell our foreclosed homes through sheriff sales. Do your research to see how foreclosed homes in your area are being auctioned.

Learn more about bidding at live auctions in this video below:

Online Auctions

In an online auction, you won’t find yourself standing on the steps of the county courthouse or at a dusty county fairground. You could be anywhere when you bid—at home, the office, even an airport—as long as you have an Internet connection. Bidding can occur 24 hours a day over the course of days or weeks, instead of on a single day.

Online auctions also broaden the types of properties you can bid on: short sales, non-distressed, bank-owned homes (known as REOs), and commercial property and notes.

There are three online sites that we use to bid on properties via online auctions:

  1. Homesearch.com – On this site, you are able to search by type of property such as bank owned, short sale, foreclosed, etc. or by single family, multifamily, condos or land. Homesearch also has a plethora of information about top auction cities and states and other helpful resources for you to check out.
  2. Auction.com – I mentioned Auction.com above because they do live auctions, but you can also bid online as well. You can also search by types of properties as well. Their first online auction was in 2008 and since then, they have sold more than $34 billion in residential and commercial assets.
  3. Hubzu.com – On Hubzu, you are also able to search by auctions in your state and type of property you are interested in. It also holds capabilities, tools for buyers and sellers to list, browse, research, bid, place offers and track/manage residential property information.

Out of those three sites, the one that I personally prefer is Auction.com. I say this because once you win a property through an online auction, they have a simple, streamlined process that you need to go through with all the paperwork and correspondence with the title company.

How to Bid in an Online Auction

Let me quickly walk you through the steps of bidding at an online auction:

  1. Set up a free account on your website of choice
  2. Put in your search criteria such as 3 bedrooms, 1 bathroom, zip codes, etc.
  3. Check and see if the property you are interested in is listed on the MLS or see if you can somehow get access to check out the property in person BEFORE the auction. *If you aren’t able to forecast the repairs, I don’t recommend bidding blind on properties because you could be blindsided by buying a property that has tons of unexpected, expensive repairs.
  4. You HAVE to be able to determine your maximum offer price. *Using my foolproof automated offer formula by taking the after repair value x 65% minus the repairs equal your max offer price.
  5. Make sure you know what your down payment is going to be – most sites down payment is 10%. *You can use your own money for the down payment or have your private lender ready.

To see more about my experiences in online auctions, watch the video below:

Case Study – Walnut Drive

Let’s talk about a property we just bought at 18046 Walnut Drive in Strongsville, Ohio for $87,150. This property was a unique case where it was listed on the MLS, but you couldn’t purchase it from there. It was only listed on Auction.com.

In order for us to know if this was a good deal or not, we needed to figure out the After Repair Value (ARV) of the home. We were able to do this by looking at a property a few doors down that just sold for $189,900 and it’s nearly the exact same house as the one we had our eye on.

If we do a good job on the rehab and reposition the property so it’s one of the most beautiful houses on the street, there’s no reason why we shouldn’t be able to sell it for $189,900, also.

Let’s break it down using the Automated Offer Formula I mentioned previously to find our max offer price:

ARV: $189,900
X 65% = $126,000
Minus Repairs = $40,000
Max Offer Price = $86,000

We won the bid at $83,000, but because of the fees Auction.com stuck us with, we had to add on a 5% buyer’s premium so the actual purchase price was $87,150. If all goes well, our gross profit will be around $62,000 and with closing costs, financing costs and realtor commissions we are walking away with about $35-40,000.

How about that for a $40K Flip?!

To see more about the house we just purchased on Walnut Drive, watch the video below:

54 More Methods to Finding Real Estate Investments

Now that you’re a live and online auction expert, check out this free report I put together with my Maverick Mastermind Group of highly experienced students. This is the real estate investors bible broken down into free online resources, paid online resources, free offline resources and paid offline resources.

Get your copy here and then let me know which you like best and what methods are currently working for you that aren’t in here!

Be Daring,

CEO Strategic Real Estate Coach

CEO Freeland Ventures and Freeland Lending

CEO Yellow Jacket Properties

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Josh Cantwell Twitter



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