The First Few Steps
To start real estate investing over the Internet, register at an online auction site. REDC runs one of the more popular sites for bank owned or REO properties in Southern California. Once registered, you can customize searches to return a list to you of properties located in the area you are interested in.
Take some time to get familiar with the homes and values of the properties. Consult with a real estate agent in the area. If you plan to flip the property, the real estate agent may be willing to do some preliminary research for you. If you are an out of town buyer, the agent will sometimes agree to physically visit the property and give you guidance.
Once you have selected the property, register to bid on it by following the auction company’s instructions. Be prepared to show proof of funds to qualify to bid on the property. Bid4homes is another site that provides you with the opportunity to bid online for land and homes.
Complete your due diligence. Check the title, the comparable homes, how long it has been vacant, and so forth. Remember that the price is low for a reason. Virtually all REO properties are sold “as-is”. Whatever company is holding the property, if they did not live in it, they do not know about any repairs or damage that might be a part of the property, and you will have to accept that they will not be disclosing anything about the property to you. That can often amount to a money pit for you. Caution is the name of the game when you attempt real estate investing over the Internet.
Set up your finances. Most online auction sites will require cash in full at closing. So discuss your options with your lender at this point. Some sites will provide you with contact information for loan advisors that hold the current note. This is a crucial step to successful Internet real estate investing.
Once you sign up to bid on a specific property, you will most likely be required to make a deposit. The deposit will be applied to the purchase price if you win the bid, and will be returned to you if you do not. Be sure you are dealing with a reputable auction site prior to depositing any funds at this point. This is the point you will be asked to show your proof of funds for the entire purchase price as well.
There is a level of excitement that comes with online bidding, so be sure to have a preset amount that you will not exceed before you begin. As the auction draws to a close, the pace of bidding will pick up. Some sites extend the bidding, moving it into overtime until there is a predetermined amount of time that no bidding takes place.
Congratulations! You have just completed the process of real estate investing over the Internet by participating in an online auction. Now you just need to be available by phone for the online site to reach you within the next 30 minutes and the property you successfully bid on is yours.
Most properties can be purchased before the actual auction by submitting an offer to the listing agent. Using a Realtor can sometimes still be the best course of action. Or, if you find the auction process too intimidating, your Realtor can bid online for you. That will eliminate the compulsion to overspend when caught up in the action of the auction.
Finding an agent that has represented buyers on REO properties successfully in the past will minimize the work involved for you.
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