By Octavio Nuiry, RealtyTrac Staff Writer   

Karen Krynen saw an opportunity.

Nestled at the top of a hill with a long private driveway, the bank-owned property sitting on a huge 40,946 square foot lot was exactly what she was looking for.

Krynen and her general contractor husband, Jeffrey, were searching for a fixer to build their dream home.

“My husband and I decided to pursue this particular foreclosure property because we knew that the bank’s price was well below what most houses in this neighborhood sell for and because it’s a large lot — almost an acre,” said Krynen. “It’s an area we never thought we could afford to live in. Yes, the house needs a lot of work but we’re up for it and we’re so excited about the area, and what our house will eventually become.”

The REO property, which had been on the market for 324 days, was located in a private and quiet area, commanding panoramic views of La Habra Heights.

Right way, Krynen knew this was the one.

For years, Krynen had read the stories and seen the ads about buying foreclosed properties. But the notion of buying a foreclosed property from the lender didn’t take shape until she signed up for RealtyTrac.

“I noticed a banner ad for RealtyTrac on a real estate website,” she explained. “The banner offered a one-week free trial. I tried it out and was impressed. I waited a few months to sign up and found our future home — within about 3 days.”

A few mouse clicks later, Krynen discovered what she calls her “forever house.”

“After getting all the background on the property through RealtyTrac, we contacted our Realtor and went to see it,” she said. “We knew right away that this was something special.”

The owner had defaulted on the loan and the lender had repossessed the home. The bank listed the house for sale at $599,000. After nearly 11 months on the market, the bank slashed another $49,000. That’s when Krynen and her husband came in.

Krynen figured the house was worth $800,000 as is. Homes were selling in the area for $700,000 to $2.5 million. They made an offer for $500,000 and the bank accepted their offer.

“RealtyTrac started the whole purchasing process for us because we never would have found this home if I hadn’t used your site to zero in on foreclosures in a neighborhood we desired,” she added.

Although the home was small with two bedrooms and two bathrooms and a total of 1,573 square feet, she figured her husband could build a larger home on the large lot.

“Since the property became ours, my husband (a general contractor) has demoed the inside and we’re getting ready to move into an RV on-site since our own home sold faster than we expected — a good ‘problem’ in this current market,” she said.

From her online real estate research, Krynen learned that the road to successfully purchasing foreclosure property starts with good information. “At one point, I was going to the county’s records office to track down liens on distressed homes. I realized that it’s so much easier to let RealtyTrac do the legwork for me.”

Adds Krynen: “I was so thrilled when the deal closed — on my birthday. Thank you for leading us to our ‘forever house,’ as we call it! Thank you, thank you, thank you!”

In this challenging real estate market, curb appeal is particularly important for a home seller. Here are some tips for hiring a landscaper who will do a good job at a reasonable price.

• Review a portfolio. A neighbor’s recommendation is a good starting point, but it is also worthwhile to examine other jobs the landscaper has done and ask for references. Hiring someone who isn’t reliable, doesn’t finish the job or who uses unhealthy plants is a costly mistake.

• Consider maintenance. Asking for a low-maintenance design will ensure that even if the home owner isn’t able to spend hours on the task, the lawn will continue to look good.

• Know what good landscaping is worth. It can’t hurt to let a potential buyer know what the value of the trees and shrubs are. The North Carolina-based Horticultural Asset Management specializes in assessing the value of landscape plants. For instance, it puts the worth of a healthy 60-foot-tall European beech at $50,000.

Insurance Insight: Georgia homebuilders, insurer in BIG fight
June 03, 2008 7:08 PM ET
By Tim Zawacki

Options Toolbox

Related Companies American International Group (AIG) Association Insurance Co. Builders Insurance (A Mutual) Builders Insurance Group Inc. Commerce & Industry Ins Co. Travelers Cos (TRV) Vinings Insurance Co.

Related Documents Insurance Regulatory Filing (PNC-AS) Builders Insurance (A Mutual) 12/31/2007

Related Articles 10/15/1999 Bull market in demutualization

Related Issues In Focus Need insurance data, STAT!

Even as Georgia’s homebuilders wrestle with challenges associated with the downturn in the residential real estate market, they’ve entered a fight with a mutual captive insurance company with which the industry’s trade group has been partnered for well more than a decade.

The implosion of the housing bubble serves as a strong undercurrent to the battle. But more crucial have been concerns over executive compensation and the resurfacing of an issue that drew headlines around the insurance industry throughout the 1990s: the desire of a mutual insurer to pursue a conversion to a mutual insurance holding company (MIHC) structure.

Builders Insurance (A Mutual Captive Co.) was formed in 1996 to provide workers’ compensation coverage to eligible members of the Home Builders Association of Georgia, or HBAG, expanding upon a self-insured fund that had been created in 1992. The company, through a downstream holding company called Builders Insurance Group Inc. (BIG), later added two subsidiaries by way of acquisition, facilitating an expansion into new states.

Builders generated all of its premiums in 2007 from the state of Georgia. At the group level, including the results of affiliates Association Insurance Co. and Vinings Insurance Co., three-fourths of its business came from Georgia, with Florida ranking as a distant second.

Builders ranked as the fourth-largest writer of workers’ comp coverage in Georgia last year at the group level, according to SNL’s statutory market share data, down from third in previous years. Share for the Travelers Cos. Inc. group increased to 7.24% in 2007 from 6.38% in 2006 while Builders’ share retreated to 7.04% from 8.71% in 2006 and a seven-year peak of 9.77% in 2005.

On the individual-company level, again according to SNL data, Builders remained the largest single workers’ comp writer in Georgia in 2007, with market share of 6.16%. But its lead over second-place Commerce & Industry Insurance Co., an American International Group Inc. unit, narrowed to 1.14 percentage points from 1.30 points in the prior year.

Builders reported $111.1 million in direct premiums written last year across all lines of business on an individual-company basis, down 18.5% from 2006 levels. Specifically in workers’ comp, direct premiums written totaled $82.9 million, a year-over-year decrease of 20.1%. The decline accelerated in the first quarter of 2008, with total direct premiums written of $17.9 million representing a 39.1% retreat. Workers’ comp premiums fell by 32.6% to $14.9 million.

Builders blamed “a slowdown in the homebuilding industry, as well as an overall softening of the property and casualty market” for its weakness on the top line. Additionally, the company said that a decline in the average size of policies offset an increase in policy counts. But the company’s annual statement as filed with the NAIC does not delve into the details associated with a burgeoning proxy battle over future control of the group.

The fight seems to go back to July 15, 2007, when the Atlanta Journal-Constitution published a lengthy exposé of compensation paid by Builders to its board members. According to the article, average compensation paid by the company to its directors in 2006 exceeded that of much larger Atlanta-based companies United Parcel Service Inc. and Coca-Cola Co.

According to various HBAG documents, the association leadership subsequently convened meetings with Builders’ officers and directors to express its concerns about the company. Builders then held its annual meeting of policyholders Feb. 7, which HBAG argued was three months earlier than normal and came on only 10 days’ notice, and therein passed amended bylaws that HBAG said makes it “practically impossible to remove a director.”

A month later, according to HBAG, Builders terminated its exclusive endorsement agreement with the association in favor of a new affiliation with the Contractors Benefit Association, which HBAG described as “little more than a shell association” that “offers very few benefits.”

Builders, meanwhile, countered the previous agreement with HBAG was good for the association, given annual dues of as much as $675, but expensive for its policyholders. The Contractors Benefit Association arrangement, according to Builders, offers a low-cost membership option with only $60 per year in dues to policyholders “in response to the extreme and extended downturn in the housing market.” Builders said that as a mutual captive insurer, it is only permitted under Georgia law to sell policies to members of sponsoring associations.

Another point of contention has been Builders’ support of MIHC legislation in 2007. According to an e-mail obtained and redistributed by HBAG in its proxy materials, Builders had been pressured by Georgia Insurance and Fire Safety Commissioner John Oxendine to convert into something other than a mutual captive insurer. The legislation, according to the e-mail, would allow Builders to convert to an MIHC, providing greater flexibility for future growth as a downstream association captive under a newly created holding company.

MIHCs were opposed through the 1990s by policyholder advocates who argued that the structure stripped policyholders of their ownership rights without providing full and fair compensation in return. HBAG argued that Builders’ efforts to win passage of the legislation represented “an underhanded move … that would have allowed the board to convert the company to a stock company, and issue stock rights up to 10 percent of the company to officers and directors and an additional 10 percent to the officers, directors and employees through a benefit plan.”

Builders did not deny the potential for it to pursue a conversion to an MIHC structure, which is indicated as among the strategic alternatives the company’s board considers as part of its fiduciary duties to policyholders. The company noted that any future conversion would require policyholder approval and that policyholders would have the right to purchase stock pursuant to such a reorganization.

Given the circumstances in their totality, HBAG went public May 22 with an “urgent call” to its members who are Builders policyholders to “take back” the insurer, citing the company’s alleged lack of accountability and transparency, particularly with respect to the issue of director compensation.

“At a time when our industry is fighting for survival in a tough economy, it’s outrageous that Builders Insurance’s board members have padded their pockets with exorbitant payments that rightfully belong to our members who are the policyholders and owners of this company,” said HBAG President Charlie Eison in a May 22 press release. “We need to take control and return Builders Insurance to its rightful mission of serving our members — not creating a financial jackpot for directors.”

According to SNL’s statutory data and calculations based on that data, Builders recorded total directors’ fees of $638,000 in 2007, representing 0.36% of its total revenue for the year. That’s well above the industry average of just less than 0.03%, but only 12th-highest among the 211 P&C insurance groups with $100 million or more in 2007 revenue. The company’s relative level of director fees ranked second in that group in 2006, but Builders said it has since changed the way it paid its board members to a flat retainer fee without any incentive pay or deferred compensation program. HBAG counters that it believes the company is underreporting the 2007 compensation.

Builders defended the directors’ compensation as “fair” in light of the company’s record of growth in revenues and its “exceptional service” to its policyholders. HBAG argued that the higher compensation came during a time in which premium rates were increasing and policyholder dividends had been declining.

The “urgent call” to HBAG members asks them to sign, date and return a blue-colored consent form in support of a series of demands that includes the removal of Builders’ existing board and the appointment of a new board that would largely be comprised of current and former HBAG executive leadership.

Builders responded June 2 by urging policyholders to discard HBAG’s proxy materials and sign a white proxy card that essentially endorses the existing board. The company claims that HBAG is misrepresenting and distorting the truth to “confuse policyholders and gain … support” for its “self-serving agenda.” It dismissed the HBAG director slate as having “no discernable experience running an insurance company.”

The degree of importance the battle has taken on is of particular note in light of the backdrop provided by economic conditions. While Georgia’s homebuilders confront plummeting consumer confidence, sluggish job growth, deteriorating consumer credit and a sharp decline in single-family building permits in the state’s largest market — Atlanta — the insurance dispute occupies prime real estate on HBAG’s Web site, www.hbag.org. The association displays an illustrated check made out to “Builders Insurance Directors” in the amount of “Way Too Much Money … Out of Your Pocket!” for “excessive compensation and fees.”

By KEVIN DUFFY
The Atlanta Journal-Constitution
Published on: 06/08/08 The housing market collapse came as no surprise to Susan Shroder. A land broker for residential developers and builders, Shroder said she saw the market starting to act illogically 16 months ago.

Acreage was fetching record prices and deals were abnormally large, measured in hundreds of lots. Subdivisions were approved in unlikely locations.

Sean Drakes/Special (ENLARGE)

Susan Shroder reviews plats in her office. ‘I feel for these builders and developers’ who are going under, she said.

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Shroder, whose father and grandfather were builders and developers, wondered who was going to buy all those homes. “It just didn’t make sense to me,” she said.

Now it’s clear the demand wasn’t there. Lenders are taking back lots from overextended builders and developers, and puzzling over what to do with the unwanted land.

In better times Shroder’s 7-year-old company made deals through personal contact with landowners, builders and developers. Sales were made without any advertising.

But that strategy has changed. Now Shroder is trying to build relationships with a new group — the lenders stuck with land.

Q: If nobody’s buying land now, how are you hanging on?

A: We’ve had one closing, which was, fortunately, enough to keep us going for the year. We’ve been putting a lot into prospecting with the banks and investors, with the hope that our skill set will help them make wise decisions.

Q: Are the banks trying to turn over the property they get back or are they waiting, hoping the market will strengthen?

A: There are very few banks that are saying, ‘Please unload these properties.’ They can hold their assets for a couple of years, and in some cases even longer. Up until very recently, the banks really believed that this was just going to turn around. They’re learning a lot about the market right now and about this industry.

Q: Are you seeing a lot of builders and developers go out of business?

A: A lot are going out of business. They’re discounting the houses they have up now, dramatically. I’ve seen up to $100,000 off a home price. And then you’ve got foreclosures that are being thrown into this equation.

I feel for these builders and developers. There are a lot of really good people who for the most part made good decisions. There were [also] some not-so-good decisions, but mainly the ones I worked with, they gave a lot back to the community. They’re not going to be able to do that anymore.

Q: As a land expert, what’s your take on how we got to this point?

A: We had a lot of other markets that were feeding our market that fizzled out. The influx of people from other areas like New York, New Jersey, Florida, California — that ceased. In Gwinnett County a large number of the builders were selling to people from other states. Land prices got out of whack. Landowners, even up until a few months ago, were wanting to overprice their property. Development costs went up. Construction costs went up. But the income for the buyer did not go up. There are only a certain number of people who are going to buy $500,000 homes and up.

Q: No one saw the good times were going to end?

A: I didn’t see any land sellers give up what they wanted for their property. It didn’t have any logic to it. It’s what people wanted. There is a lot of land on the outskirts that probably never should have been developed.

I did see some builders and developers cut back. Some were very careful and cautious, particularly those who had been through a bad market in the past.

Q: Land buying changed in 2003. What happened?

A: People started buying in bulk. There’d be competitive offerings on the lots from different builders and that sort of created this fuel for the fire where the only way to get a good site would be to purchase and close on all of them at the same time. It was falsely inflated in many cases, the value of the lots.

I’ll give you an example in the Grayson area. In 2000-2001, acreage was being sold for maybe $20,000 an acre. Later I sold some land there at $47,000 an acre. I swore and believed with every inch of me that was as high as the market was going to bear.

Some people across the street had been speaking with a local real estate agent who advised them their land was worth $105,000 an acre. They asked me if I could help sell their land. I felt it was a waste of time and that it was wrong. I didn’t know anybody who would buy it for that amount.

Sure enough, they sold it for $105,000 an acre. We all got a little greedy.

Q: How did you get in this business?

A: I had a developer who asked if I would help sell some lots. I helped him with a subdivision in the Hamilton Mill area in north Gwinnett. I saw a pattern of me calling people who’d say, ‘No, that’s not what I’m interested in, but I am interested in this if you can find it.’ I just started building my own database. I saw a big hole nobody was filling.

Q: Is Atlanta still popular with land investors?

A: Atlanta really is a good strong market. I drove into Atlanta in 1983 with my real estate license; I didn’t have anything else. I remember driving in on Interstate 75 and looking at all those buildings and thinking ‘Wow, look at all those jobs. I’m going to do something here.’

Atlanta’s still like that. If somebody wants to work and wants to succeed, they’re very likely to be able to do that here.

Soft condo sales prompt strategy shift

By Paul Donsky
The Atlanta Journal-Constitution
Published on: 06/11/08 The subprime mortgage crisis and subsequent global credit crunch have claimed another victim: the Atlanta condo.

Local real estate developers say financial backing for condo projects has all but dried up. Those able to get financing are turning to high-end rental apartments instead.

“Building condos right now is next to impossible, it really is,” said Stephen Franco, a partner at Franco DeFoor Properties, an Atlanta real estate development company. “It’s just financing. You can’t get financing for condos.”

High-end apartment complexes are in the works across the metro area, from trendy intown Atlanta neighborhoods to more suburban locales. Franco DeFoor is planning to build 250 to 300 upscale apartments on Memorial Drive in southeast Atlanta’s Reynoldstown neighborhood, not far from a cluster of condo complexes.

“The new darling child of multifamily residential is rental,” Franco said.

Atlanta’s once-highflying condo market is reeling from an oversupply of units and a drop in demand as prospective buyers either can’t get loans or are choosing to rent until the economy improves, real estate experts say.

It’s a dramatic about-face for Atlanta’s housing industry, which became infatuated with condos earlier this decade. The building binge changed the city’s skyline and introduced a generation of Atlantans to high-rise living.

The condo craze was fueled by the soaring popularity of intown living. Growing numbers of young professionals and empty nesters sought a big-city lifestyle, where they could avoid lengthy commutes and walk to restaurants and shops. Lax lending standards, meanwhile, greatly increased the customer base.

While the Atlanta condo market never became as overheated as areas such as Miami, a glut of units has forced prices down and left some buildings half-empty. And a number of condo projects begun during the boom are under construction and poised to come online, further saturating the market.

Too risky for banks

It all spells too much risk for banks and other lenders that have been badly burned during the real estate crisis. Apartments have historically been less of a gamble than condos, experts say.

Atlanta-based Pollack Partners has completed the first phase of its first project, Two Blocks Apartment Homes, a $59 million, 400-unit luxury apartment complex in Dunwoody. The company also is planning a high-end apartment complex near Atlantic Station with up to 600 units.

The decline in new condo construction is a nationwide phenomenon. According to the National Multi-Housing Council, an industry trade group, condos accounted for 25 percent of new multifamily housing starts during the first quarter of this year, compared with more than 50 percent in 2006 at the height of the condo boom.

Many experts expect the trend to continue.

“Apartments are a fabulous sector to be in right now,” said Bill Donges, CEO of Atlanta-based Lane Co. and chairman-elect of the National Association of Home Builders Multifamily Council. “People are coming back to rent because less people are able to qualify” for home mortgages.

In 2006, Lane’s portfolio was split evenly between condos and apartments. Now, 95 percent of the company’s units are rental apartments and 5 percent are condos. The company, which built apartments and condos at Atlantic Station, is now planning apartment complexes near City Hall East and in Atlanta’s Grant Park neighborhood.

The abrupt change of fortune in the condo market has claimed numerous victims in Atlanta. Prices of existing units have been slashed in attempts to drum up business. Several high-profile condo projects have been put on hold, including Cousins Properties’ Fox Plaza in Midtown. The owners of Tribute Lofts on Freedom Parkway near downtown Atlanta plan to auction off 40 condo units this month.

Residential development in Atlanta may be slowing, but it’s far from ground to a halt. The metro area added more than 150,000 people last year, second in the nation behind Dallas-Fort Worth, according to the U.S. Census Bureau, and those newcomers have to live somewhere.

Many are young professionals, a demographic ideally suited to high-end rental apartments, said Bill Bollwerk, managing director at Alliance Residential, one of the nation’s largest apartment builders.

Alliance is making a big bet on metro Atlanta by building four apartment complexes at the same time, with a total of nearly 1,000 units. Two opened last weekend —- one on Piedmont Road at I-85 near Buckhead, another in north DeKalb County near Dunwoody. The other two sites are in southeast Atlanta and in the Howell Mill-Marietta Street corridor near Georgia Tech.

“A lot of good jobs are created in Atlanta, and that’s the primary driver for apartments,” Bollwerk said.

The new rental complexes are far different from the dowdy garden apartments that sprouted in the 1980s and early 1990s. Today’s high-end apartments often have “condolike” touches such as granite counter tops, stainless steel appliances, skyline views and rooftop decks.

Pollack Partners’ Two Blocks complex in Dunwoody, for instance, features an Internet coffee bar, a clubroom with wide-screen TVs and an outdoor living room that includes a fireplace and Wi-Fi access.

Some units at Post Alexander, Post Properties’ new apartment complex near Phipps Plaza in Buckhead, have soaring 10-foot ceilings, ceramic tile, granite counter tops and hardwood floors.

“Ten years ago in an apartment, you’d typically have pretty basic appliances, you’d have Formica counter tops, pretty plain-vanilla finishes,” said Tom Senkbeil, chief investment officer at Post Properties.

All this luxury comes at a cost, with monthly rents in the $1,500 to $2,000 range. Developers say the rents are needed to offset the high cost of land in desirable intown locations.

Atlanta-based Post historically has been strictly an apartment developer, but during the condo boom, the company dipped its toe into the for-sale market. Post, like many companies, has re-evaluated that strategy.

But real estate is a notoriously cyclical business: What’s out today is sure to be hot tomorrow. Some observers say the condo market may be near a turning point.

“We are starting to see prices come down where people are starting to buy again,” said Richard Martin, an associate professor of real estate at the University of Georgia’s Terry College of Business.

NEW LEASE ON LEASING

Troubles in the local condo market are pushing developers to build rental apartments. The number of apartment units has risen in recent years.

Units started

Units completed

2007….2006….2005….2007…..2006…..2005

Inside

Perimeter…4,256…3,617…2,997…..3,010….1,919….1,984

11-county

metro area 10,177…5,637….6,547….6,538….5,123….5,318

Source: Dale Henson Associates

By RealtyTrac Staff   

Online auctions offer both novice and experienced real estate buyers a way to obtain under-valued properties. Below are a dozen tips from Bid4Homes, a leading online auction company, to help you successfully and profitably bid online for real estate.  

1. Don’t be tentative about participating in an online auction.
Today, people buy and sell a wide range of extraordinarily high-value items, from Porsches to Picassos, through online auctions. Millions of people are frequent bidders on online auctions.

Real estate is no exception. More than half a billion dollars of real estate has been sold through our online auction site, bid4assets.com. Most online real estate auction sites are easy to use and give you the information you need to assess the true value of the item.  Once you try shopping for real estate on an online auction, you’ll know why it has become a widely accepted way to find great deals on property.

2.  Get to know the auction site’s process and policies.
Every auction site operates its auctions differently. Be sure to understand the auction process and site policies in detail for the site you are using. The process and site policies are usually clearly outlined in the “Terms of Service” agreement. There are often differences. For example, real estate bids are a binding contract on some sites. On other sites they are not binding.  On some sites, auctions have a set end time that won’t be moved. On other sites, like Bid4Homes, the auction continues until no bids are placed for five minutes so the bidder is assured of submitting their “best and final” price.

3. Clearly understand what is being auctioned.
This seems basic, but while most properties and real estate auctions are straight- forward, they can come in several forms that may not be easily understood by potential buyers. For example, is the property a condo or a timeshare?  Real estate can fall into several categories of deeds (warranty, quitclaim, etc.) Is the property for sale outright or are you bidding on a down payment (called a “bid and assume” sale)? “Bid and assume” auctions require payment installments to the seller in addition to the bid amount; and the winning bidder does not obtain the title until the outstanding balance is paid in full.

4. Get to know the seller.
Find out as much about the seller as possible. If the auction site allows buyers to rate a seller or provide feedback, review the information thoroughly. Buyer feedback provides insight into the person/company selling the property and may reveal potential problems. It is advisable to be particularly thorough with all research if a seller profile has feedback from a few buyers. If feedback is sparse, consider checking the Better Business Bureau (www.bbb.org) or Federal Trade Commission (www.ftc.gov) if the seller is an institution.

If you are concerned about whether or not the seller owns the property, it is acceptable to ask the seller to send an electronic copy of the property deed.

Always provide feedback on a seller after your transaction is finished.

5. Ensure your ability to bid and close the deal.
Buying real estate requires significant financial resources. Even if you do not have cash on hand to cover your bid, you still may be able purchase real estate through online auctions. Identify a source of money well in advance of the start of bidding. This may include getting pre-approved for financing. Be familiar with the seller’s payment terms to ensure that you have the cash in-hand, when it is required, to pay for the property should you become the winning bidder.

Some auctions require a deposit in order to bid. You’ll find the deposit amount listed in the auction. Usually this deposit can be placed in several ways. Some methods require more time (many sites require only “certified funds”). Be sure you have the cash to make a deposit and, if you are transferring money, allow the requisite time for the transfer to occur.

6. Consider the settlement requirements, including payment options.
Payment arrangements for property bought through an online auction are made between the buyer and the seller. The auction services company is generally not involved in this transaction.

Be sure you identify all the payment requirements and fees that the seller is charging. A seller can charge a fee for services like title search, transfer or closing. There may even be a “buyer’s premium”. Specifics on such fees should be listed within the auction description.

Be wary of sellers who require payment by a wire service like Western Union or MoneyGram. These services provide no process to dispute the transaction in the event that the seller misrepresents the property. Payment methods like ACH (e.g., electronic deductions from a checking account), personal checks and PayPal provide buyers with a process to dispute charges and therefore offer some level of protection.

Note that on some sites the transaction is a binding contract so long as the property listing is accurate. If you have concerns about the settlement requirements or believe you may not be able to meet them, contact the seller prior to bidding to ask about alternative arrangements.

7.  Research prices of comparable properties online.
Many factors influence what a buyer is wiling to pay when it comes to real estate. The estimated price of comparable properties located near the listed property is one factor in assessing the worth of a property. Look at the sale price of properties nearby that have sold recently. Be sure to evaluate the sales price and estimated value of similar properties that are in the same zip code, if not within a few blocks of the property under consideration. Adjust your estimates based on factors like the number of bedrooms, bathrooms, lot size, square feet of living space, recent renovation, landscaping  and overall condition.

Online newspaper classifieds and real estate broker sites can be a source of listed prices for nearby comparable properties. For example, a site like RealtyTrac, with almost 1 million listings, can be a valuable source of current, local information. Any online properties listed on RealtyTrac are paired with a list of up to 15 comparables displayed on a map, along with a link to check local properties listed on the Multiple Listing Service.

8. Research the neighborhood, including amenities, infrastructure and nearby features that may add or detract from the property.
Most real estate buyers know how important location is to establishing the value of a property. The evaluation of a property’s location is up to individual buyers based on the distance to places that are important to them.

Consider the proximity of the property to features like mass transit, highways, business centers, shopping, schools, or recreational areas. Look for the location, for example, of landfills, industrial parks, airports or quarries.

Google Maps and RealtyTrac.com can give you aerial views of most neighborhoods in the U.S. The address of the property you are considering and important landmarks can be easily queried, located and labeled on this local map.

Google Maps can also give you street level views of many neighborhoods, as if you were standing in the street

The U.S. Department of Housing and Urban Development is a source for information about real estate developments, both those that have been completed and those that are planned. Search engines can also provide a means to research the neighborhood and town where the property is located.

9.  Be rigorous about due diligence. Eliminate the chance of “surprises”.
Many auction listings provide a summary of due diligence findings. Be sure to thoroughly review all the information provided in the listing and confirm claims whenever possible.

Counties generally retain important information on special circumstances associated with real properties, including tax rates, zoning designations and details on any liens or back taxes on properties. It may require some legwork to get the information, but it is worth the effort. Online auction properties listed on RealtyTrac include loan information and previous sale information to help your research.

Find out if the property is part of a homeowners association or covered by a community covenant. If it is, there could be recurring expenses or community restrictions. You should be particularly aware of restrictions if you intend to do extensive renovations.  Do not hesitate to ask the seller to give you details, to clarify information or confirm your findings.

10.  Visit the property and arrange for professional property evaluation
You may decide to limit your activity to properties in your area when starting out with online auctions, It may sound like common sense, but it’s always a good idea to visit a property in person; however,that may not be possible for properties auctioned over the Internet.  If the interior is not accessible, it will be valuable to drive by the property and view the exterior and the yard.

Alternatively you can hire an inspector or appraiser to evaluate the property for you. Plan ahead. Access to the property can often be a challenge given schedules, location of the property, seller and buyer, etc. Many properties for sale through online auctions may have limited hours for inspecting the property. Arrangements to inspect the property should be made with the seller prior to bidding on the auction.

Here is a source for locating a home inspector or appraiser: American Society of Home Inspectors (www.ashi.org) and American Society of Appraisers (www.apprasiers.org).

11. Determine the maximum amount you are willing to pay for the
property after considering all factors and all anticipated expenses.  

Determining the highest price you are willing to bid is an important part of the process. Identify this price and don’t bid higher than your limit. In other words, don’t let your emotions control your bidding and be willing to move on to the next property if you are outbid.

12. Bid with confidence.
You have done your homework, developed a bidding plan and now you are ready to bid. 

Some auctions allow you to bid in two ways. A “flat bid” means that you place bids manually. You must place a bid each time you are outbid. An “auto bid” is the maximum bid you’re willing to bid on the auction. The auction site will automatically increase your bid to maintain your high bid position or to meet the reserve price. Your bid will be increased only as others bid against you. Your “auto bid” is held confidentially in the system.

Remember to carefully read the Terms of Service one last time before you bid.
Then bid with confidence and have fun. Enjoy the exhilaration that comes with online bidding and buying real estate.