Auction investing is considerably more risky than other potential investment opportunities. But, with greater risk comes greater reward. With a defined strategy, the right focus, an accounting of the inherent risk and a qualified and thoroughly researched list of auction properties, there is much to be gained from these investment opportunities.

Unlike preforeclosure investing, an auction investor isn’t concerned with subordinate liens because they are wiped out at the auction. Typically (but not always, so be careful) the foreclosure is on the first mortgage, so all that may be left to deal with are outstanding property taxes, or perhaps an IRS lien. Another advantage of auction investing is that because of the cash requirements, the pool of competition is much smaller. In fact, if you attend a few auctions, you’ll start to recognize the faces of the serious investors. And they’ll notice you, too.

Auction investing poses greater risk because of the collapsed timeframe for research and the lack of access to the property. This means no professional property inspection to uncover fundamental problems and no professional title research to reveal title issues. And the winning bidder may have eviction issues to deal with before they can take possession of the property.