I was recently talking about buying homes with a buddy of mine who is also from Montgomery County, OH. Through the conversation, it came up that our county is known as “the birthplace of innovation.” Now, to me, that is probably overstating the case a little bit—innovation was born the first time somebody knocked a few rocks together—but there’s no doubt that it’s an exciting and interesting place to invest in.
So I asked him what kind of innovations he was employing in his real estate investing. Finding the best investment deals in Ohio is definitely something in which I’m always keen on. His response was that he was getting really interested in the Sheriff auction of foreclosed homes.
Now, there are some benefits to a foreclosure auction, but to me, that’s a little bit like banging rocks together. It might work. You might start a fire. But you also might just be knocking together a few stones until it is dark and your hands are bleeding.
I think that buying from the Sheriff Auction in Montgomery County Ohio may have more risks than rewards. There is a chance it can be done right, but it is risky, and there are smarter, faster, and ultimately more effective ways to successfully invest in the real estate market here.
The Rewards—and Risks—of the Sheriff Auction in Montgomery County Ohio
It’s not that buying an auction home is the very worst idea in real estate investing. There are benefits to it, which is why it is pretty popular. Of course, every silver lining has a cloud, as they say. Let’s take a look at these rewards and dive into why they all have their own pitfalls.
Predictable bidding times. One of the frustrations of going cold when looking for distressed houses is never knowing when a house might be ready to be bought up. But, with an auction, you have regular times. For example, the Montgomery County property auctions are every Friday at 10:00, unless there is a holiday.
In my town, there is a farmer’s market every Saturday, and in the spring there is a stand with the best rhubarb. I always plan to go and get some. It’s predictable: if I want great rhubarb, town square on Saturday morning. But of course, everyone knows that. If I’m not there by 7:00, the rhubarb is gone.
It’s the same with an auction. Everyone knows when they are bidding. That means everyone with a passing interest in investing is going to be bidding on the houses. That means your direct peers, but it also potentially means investment groups with deep pockets.
Low initial prices. There are a few types of sales from the Montgomery County Sheriff, including Mortgage Foreclosure Sales, Treasurer’s Tax Sales, and Tax Lien Foreclosure Sales. The banks and government offices holding these houses don’t necessarily want to hold on to them. So the initial price is pretty cheap—sometimes as low as $20,000.
When people with deep pockets are bidding against each other, prices go up. And up. And up. I’ve heard stories of people paying double what they initially expected. A lot of these big investment firms make money on volume, so overpaying is fine. But if you try to outbid them, you could use a ton of your liquidity. And that doesn’t guarantee a profit.
High volume. There are usually a lot of houses available. This isn’t always the case, but in times with high levels of distressed houses, the Sheriff’s list can get pretty long.
I know we said that these auctions usually have a great selection, but that has a lot of fluctuations. Right now, Central Ohio is seeing its lowest level of foreclosures since before the Great Recession. That’s great for the overall economy, but that also means that you’re going to have fewer houses in the auction.
Adrenaline. I don’t know if you can count this as a benefit, but auctions are undeniably fun. They get the juices going. You are competing against people for a prize. If you are a competitive person, these can be your scene.
In a bidding frenzy, you might not make rational decisions. If you didn’t go in with an exact plan on what to bid on and how much to bid—and follow it—you’re more likely to buy into a money pit.
You won’t have a chance to inspect a house, so you don’t know if there are some rotting floorboards or a leaky roof. You don’t have a chance to make an estimate of what work is needed. So you might end up overpaying, and you might end up having to sink a lot more money into the house you bought. That could ruin your profit for the year.
A More Innovative Approach to Investing in Montgomery County Ohio
See, I like to find houses before they are foreclosed on. I can inspect the house and talk to the owner. I can get a sense of the work I’m going to need to do. And, getting qualified leads on distressed houses in Montgomery County has become a lot easier since I became an independently owned and operated HomeVestors® franchisee.
You know us—we’re the people with the nationally-known “We Buy Ugly Houses®” ads. We’ve been around since 1996, and when distressed homeowners are looking to sell, they call a trusted company. So, I don’t have to wait on the Sheriff Auction in Montgomery County Ohio or contend with a million competitors to find a good deal.
If you’re interested in taking your real estate investment business to the next level, contact HomeVestors now about becoming a franchisee. It could be the innovation you need to advance your real estate investment career.
Each franchise office is independently owned and operated.