The foreclosure auction in Dutchess County, NY feels like an unresolved conversation.
When it shut down during the pandemic, I was in the midst of a lot of discussions about it. Younger real estate investors I was mentoring were gung-ho about finding great deals there. They thought it was a place for inexpensive deals on properties. I understood why they felt that way. But I didn’t really agree.
There are a lot of problems with the foreclosure auctions here in Dutchess County, and frankly, there are much better ways to get good leads. The auction is reopening this fall. But I think it is about time to end the conversation.
The Importance of Getting Good Leads
Any real estate investor will tell you that the key to this business is getting leads. But a good investor will tell you that the key to this business is getting good leads. Anyone can get leads without paying for them, or without vetting them for being worthwhile or not. But getting a high volume of leads means wasting time sifting through the good and bad. What you want to get are what’s often referred to as “qualified” leads.
What do we mean by “qualified” real estate leads? There are three major components.
- The homeowner reaches out to you. Approaching a homeowner isn’t a disaster, but when they reach out to you, it’s because they want to make a deal. You don’t have to waste time establishing yourself.
- The information was freely provided. Trust is one of the most important parts of this business. If the owner is giving you information about their house, it’s because they trust you. That’s huge. When you have to go snooping and digging, closing on a purchase can take a very long time.
- You have exclusive access to the lead. Competition is challenging. Prices skyrocket. Unethical buyers try to slip in. It gets harder to become the signal through the noise. You’ll spend way more time chasing a lead while lowering your odds of getting the house.
These are the ways to find a “qualified” lead. So why do I advise against the Duchess County, NY foreclosure auction? Because it doesn’t meet any of these requirements.
How the Foreclosure Auction in Dutchess County Can Let You Down
The best way to get real estate investment deals is to have the homeowner come to you and almost no one else. That is not what you’ll get if you go to the Sheriff auction out of Poughkeepsie.
For one thing, you aren’t really dealing with a homeowner. The homeowner is out of the picture. For whatever reason, they have already experienced a foreclosure. So you are trying to buy a real estate foreclosure, which is much different than buying one from a homeowner. You’re dealing with an institution.
The institution has taken control of the house, and they put it up for sale. So right away, we see we are breaking the first rule. The seller didn’t approach you. They just put it up for sale. And that means you have a lot of other people who are approaching the house. We’ll get into what that competition means below.
Another problem is that you don’t have free information about the house. Dutchess County isn’t huge, but it isn’t small, either. According to Zillow, right now there are close to 80 preforeclosures in Dutchess County. This is with all the foreclosure breaks instituted by the government as a result of the pandemic. Since mortgage forbearance is ending, there is about to be a foreclosure boom in the county.
In theory, that sounds great for when the auction opens again in October (tentatively scheduled for October 2021). There will be lots of houses. But because you don’t have information, you are facing one of the risks of buying a foreclosed property, which include the following:
- The house could have liens for which you’d be responsible.
- The house could owe a lot of taxes.
- The house could be in disrepair.
- The house could look great from the outside but need major work.
- The house might become a money pit.
When purchasing a foreclosure at an auction, you may not know what you’re going to get. And, in theory, that wouldn’t be a problem. I know a lot of newer investors who think they are going to pay so little that they can make it up.
But that doesn’t really happen with auctions. And that’s because you don’t have sole access to the lead.
These are public auctions. Nearly everyone who invests in real estate in the region will be there. As will big-money groups from NYC. And they all want a house. That drives up prices. Each home becomes a competition. This means that if you want a house, you might have to pay more than you planned for a place that might cost a ton to rehab and sell. Or you might come up empty-handed. You’ve wasted time or you’ve risked your business. Either way, it’s not great.
Thankfully, there’s an alternative.
The Better Way to Get Leads in Dutchess County
I’ve been investing in real estate in Dutchess County for a long time. And I used to scramble to get leads. I probably tried everything, and honestly thought for a long time that despite the flaws, the sheriff’s auction was a good bet. That’s before I invested in an independently owned and operated HomeVestors® franchise.
As a franchise owner, I have the benefit of the unparalleled We Buy Ugly Houses® national marketing campaign. When someone needs to sell their home fast for cash—which as we said, will be happening more as people try to avoid foreclosure—they contact HomeVestors. As a franchisee, I can get the lead.
The homeowner has approached me. There’s a level of trust. There is a free exchange of information. I can evaluate the house before I make a deal. And, I don’t have a ton of competition. It’s just better for everyone. And that, to me, is the end of the conversation.
If you’re considering investing in property in Dutchess County, request information about becoming a franchisee today.
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