Whether you are attending tax lien auctions, bidding on foreclosed properties from the courtroom steps, or bidding online it is important to understand that success likely comes from what you do before
Preparation, preparation, preparation.
Do as much research and due diligence as you can on the items that are up for bid before you even attend the auctions. It is always wise to understand the value of items you are interested in, because in the heat of the moment the asking price may far outweigh the value that your research indicated.
If you’ve identified a handful of items or properties you really want, stay focused on winning those bids and ignore all of the noise. Auctions by their very nature tend to be very fast-paced and chaotic environments, but if you have a plan in place it will be much easier to navigate the mayhem and win the bid. It is also important not to get too caught up in the moment. You don’t want to walk out of an auction feeling like you made your decisions based on emotions rather than logic and preparation.
How much are you willing to bid? What is the ceiling that you will no longer cross, regardless of how badly you want to win the bid? What is the preferred method of payment at the auction you will attend? Is it cash or check? Do they open escrow or do you have to pay on-site?
As you can see there is a lot to consider, and we haven’t even arrived at the auction. Here are some dos and don’ts derived from a recent blog post
in Erie Insurance’s Eriesense
newsletter to keep in mind once you’re there:
DO place your bid clearly and as obviously as possible. Don’t raise your hand halfway or meekly yell out for a bid. If you want the item, call for it!
DO consider bidding as a team. Sometimes it can be beneficial to leverage multiple bidders in order to win at an auction. Communication and preparation are critical with this approach however, because you do not want to accidently bid against your team members or overspend your collective budget.
DO consider placing a bottom feeder bid. This bid often goes out before the item’s description is even finished, but it signals that you are interested from the start and can even land you the item if no one else bids.
DON’ T lose patience. Waiting allows you to gauge the room, and the interest of the other attendees, and can open the door to submitting the winning bid right before the close without tipping your hand.
Every auction is different, and every attendee has a different goal and strategy. What is important to understand though, is the importance of preparing for the auction. The more prepared you are, the more likely you will walk out of the auction a happy customer.
Is your IRA prepared for auctions?
If you’re planning on using your retirement savings to fund your auction purchases (yes, it’s possible!), make sure you’re on track to take action. Talk to a Senior Account Executive
to discuss the possibilities for self-directed investing.