10 Tips to Keep In Mind at Foreclosure Auctions

Pricing the Property

Before you go to an auction, there's a lot of homework to do. You need to estimate the value of the property so you don't overpay, defeating the purpose of buying at auction to get a deal. Also, understand that your bid is final -- you can't back out or renegotiate the price later. So if you overpay, you're stuck.

The first step is to gauge pricing in the neighborhood. Obtain the history of sales in the area to see how much money homes have sold for in the past year. You might also want to drop in on some open houses to evaluate the market value of different homes currently for sale.

Next, determine what you plan to do with the property. Some people fix them up and sell them, or flip them as is. Others rent the house for income, and yet others will live in the home. This decision will help determine what your maximum bid price should be.

In the end, err on the side of a conservative maximum bid so you don't end up on the wrong side of the expense/gain equation.