In Northeast

Caroline and her husband, Thomas, stumbled onto a great investment house in New York quite by accident. Within a few short months of their decision to start investing in real estate, an older home in their neighborhood of Park Slope went up for sale. They got it for a steal because the owner knew and liked them, and so he decided he just didn’t want to hassle with anyone else. Don’t you wish it was always that easy? Well, Caroline and Thomas soon learned that finding distressed homes for sale in Brooklyn that they could buy and renovate cheaply would be more difficult than they imagined. So, they started attending real estate auctions throughout NY. When I ran into them recently, I asked what their experience had been like and if they got any good deals. They couldn’t wait to tell me.

Looking at Real Estate Auctions in NY?: Finding the Best Bets for Investment Houses

Buying Investment Property from Real Estate Auctions in NY

For the most part, homes that are auctioned off are those that are being foreclosed on by a lender or are delinquent in taxes. Foreclosure and tax auctions sell houses that are frequently distressed and priced below market value. Sometimes, a lender or the city simply wants to unload a property and recover whatever costs they can. But, the court may order an auction too. Either way, the opportunity to grab a property that can be renovated and sold in pretty short order is why some investors think buying a foreclosure auction home is a safe bet. Caroline and Thomas were in this camp. And, so was I at one time.

As luck would have it, the various auctions my friends attended are the same ones I tried when I started my real estate investing career. So, we compared our notes and shared our thoughts on where you can really find the best deals on investment houses. Here they are:

  • Kings County Foreclosure Auctions. The Kings County Superior Court holds a foreclosure auction in Brooklyn every Thursday, giving you regular chances to potentially find good deals. A list of scheduled properties and auction rules can be found on the county’s Civil Court website. On the day of the auction, a court-appointed Referee announces any known tax liens or other encumbrances for each property. As a bidder, you must come ready to pay a non-refundable 10% deposit in cash, certified check, or bank check should you win. You then have 30 days to pay the balance. There tends to be a lot of properties available at this auction since the rate of foreclosures in Brooklyn has crept back to crash levels. But, they don’t always get sold because of judicial stays and forbearance agreements. So, you could end up showing up to bid on a house that no one gets to buy. Plus, because lenders don’t always disclose everything to the Referee, like if there are back taxes that will become your responsibility to pay, you may not want to bid in the first place.
  • Queens County Real Estate Auctions. The Public Administrator of Queens County holds auctions every couple of months on foreclosed homes in Queens. Properties scheduled for sale, as well as descriptions, pictures, minimum opening bids, and deposit amounts are available online and on Twitter. Without a deposit in the form of a bank check, certified check, or cash, you won’t be admitted—so, come prepared. If you win a bid, also be prepared to pay in full within 30 days or to lose your deposit. There are far fewer properties for sale at this auction than others, but you get a lot more info up front. Unfortunately, that doesn’t mean you’ll necessarily know what you’re getting into since home inspections are usually denied. Additionally, the Public Administrator has the right to withdraw properties for any reason and reject your bid outright—even if you win. For infrequent opportunities to buy so few properties, the chance of also getting dismissed by the court just adds insult to injury.
  • Erin County Tax Foreclosure Auction. The Erin County Real Property Tax Service holds tax foreclosure auctions in Buffalo. Auction dates and times are listed on the county website, as are the terms of sale. If you’ve never participated in a tax foreclosure auction, you can attend one of their two-hour workshops to familiarize yourself with the process. Minimum bids start at $500, as do minimum deposit amounts. If you win, you’ll need to pay the deposit by cash or certified check immediately and settle the balance on the date set by the court. If you’re late, you’ll incur an interest charge of 9% per annum. So, it’s in your best interest to pay on time. Even then, it’s possible you’ll have to pay for more than you bargained for. It’s only after the Referee covers the costs associated with the sale and any monies awarded to the county that property taxes are paid. If there’s not enough from the sale to remediate all back taxes or any other liens, that cost—in addition to renovation and holding costs—is on you.

Unfortunately, in addition to the difficulties that bidding and buying from these particular real estate auctions present, there is an even greater risk to your bottom line to consider. Homes in foreclosure or with back taxes attached tend to be in very rough shape. When homeowners are unable to pay their mortgage or property taxes, they’re rarely able to afford the upkeep on their properties. This neglect can go on for years and years, turning a once minor fixer-upper into a major money pit. So, even if you get a property for a little money up front, you could lose it all in the end on repairs you can’t afford.

Real estate auctions, in general, just aren’t a reliable source for consistently finding investment houses anymore. The State of New York hasn’t held a real estate auction on surplus government property since 2017 and no auctions are currently scheduled this year. Albany County no longer holds foreclosure auctions at all since foreclosed homes were absorbed into the Albany County Land Bank program. And, the City of New York offered one property for sale over a year ago—on which no bid was received.

So, no matter where you invest in New York, attending property auctions is not the route you want to go to get good deals. But, don’t give up just yet. There is another direction you can take.

Your Best Bet for Finding Investment Homes in NY

Caroline and Thomas had nearly identical experiences to mine when they attended real estate auctions. We were usually outbid by other investors. We were sometimes outbid by a lender. We’d shown up for auctions that were either canceled or postponed. And, we bought properties that had both liens and structural damage—expenditures that almost drove our investing careers into the ground. But, we also decided not to give up. To get on track for growing our real estate investment businesses, we became independently owned and operated HomeVestors® franchisees.

As HomeVestors® franchisees, leads from distressed homeowners come to us thanks to the marketing tools like the nationally-known “We Buy Ugly Houses®” ad campaign. That campaign has been going strong for over two decades, reaching homeowners in 46 states and helping them sell their homes at a time when they need it most—before an auction ever happens. And, it’s helped HomeVestors® franchisees, like me, Caroline, and Thomas, buy over 100,000 investment houses nationwide since 1996.

If you’d like to skip the gambling on auctions and get better leads, your best bet is to reach out to HomeVestors to become a franchisee. Call today!

 

Each franchise office is independently owned and operated.

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