Buying a foreclosure at auction sound like great fun! Everyone loves a bargain. We stop for yard sales, wander through antique stores convinced we’re about to discover a priceless treasure, and some adventurous souls even buy foreclosures at auction hoping to score the deal of a lifetime.
Sometimes they do.
And sometimes…well…let’s just say the surprises aren’t quite so charming.
Just this month, one investor in Connecticut bought a foreclosed home sight unseen and, after finally getting inside, discovered the skeletal remains of three people. Around the same time, a couple in Pennsylvania bought what they thought was their dream home at auction, only to find it was home to hundreds of snakes. Needless to say, neither discovery was listed in the property description.
Now, before you swear off buying a foreclosure at auction forever, let me reassure you—those stories are incredibly rare. But they do illustrate an important point: when you buy a property at auction, you’re buying a mystery wrapped in brick, siding, and drywall. You often can’t inspect it, and you don’t really know what you’re getting until the keys are finally in your hand.
I’ve seen my own version of this over the years.
One of my investor clients bought a foreclosure sight unseen, convinced he’d found a fantastic opportunity. Once he got inside, he discovered rooms packed floor to ceiling with junk, extensive water damage, mold, and enough repairs to keep contractors busy for months. By the time the renovation was finished, he had spent more than the home was worth.
Fortunately, that same investor also bought several other foreclosure properties that turned into excellent investments. That’s the nature of auction properties—you can do very well, but you have to expect the unexpected.
The investors who consistently make money aren’t chasing the cheapest house on the auction list. They’re doing their homework long before the bidding starts. They research title issues and liens, study the neighborhood, estimate carrying costs, build generous repair budgets, and decide on a maximum bid before the auction begins. Most importantly, they stick to it. The auctioneer may create excitement, but experienced investors don’t let adrenaline write the check. They take their time before buying a foreclosure at auction.
The biggest lesson? Buying a foreclosure at auction isn’t just about finding a bargain. It’s about understanding—and pricing—the unknown.
So if you’ve ever watched one of those TV shows where someone buys a house in 30 seconds with a raised paddle and thought, “That looks easy,” just remember…sometimes the previous owners leave behind beautiful hardwood floors.
And sometimes they leave behind snakes.
If you’re thinking about investing in foreclosure properties, I’d be happy to help you understand the risks, the opportunities, and how to avoid the kinds of surprises that make national headlines.