What are the Types of Auctions?

When a homeowner fails to respond to the notice of default and continues to miss mortgage payments, the next step in the process would involve the distressed property being sold in a foreclosure auction.

In the United States, there are basically two types of foreclosure auction:

Trustee Sale

This type of auction involves a Trustee, usually the County Sheriff, to facilitate the foreclosure sale in the County Courthouse. A trustee is usually the deed/title holder until the mortgage has been fully settled while the bank or lender ends up as the beneficiary of the sale in case of mortgage default.

A Notice of Trustee Sale is usually published in local newspapers to inform the public of the date, time and venue. The notice also lists the properties to be auctioned off, complete with the address and starting bid amount. If a buyer is interested in a property, he must simply make the highest bid to gain ownership.

One advantage of Trustee Sales is there are fewer bidders due to the fewer homes up for auction.

Repo Homes Foreclosure Auction

This type of foreclosure auction involves a bank, government agency or an auction house facilitating the foreclosure sale. Usually, participants have to pre-register because of the limited slots available in the venue. Repo homes auctions usually attract a huge number of home buyers and investors and if you are new, you might find yourself intimidated with the tense and noisy atmosphere.

Compared to Trustee Sales, there is a larger volume of repo homes for auction and located all throughout the state where the auction is being held. In some cases, there are also out-of-state properties. Also, the properties on the auction block are usually stripped clean of secondary liens and encumbrances since ownership has already reverted to the mortgagor.

Just like the Trustee Sale, notices are also put out a couple of weeks before the auction date to give buyers time to prepare. The highest bidder also goes home with the property.

For more information, check out our How to Buy Homes at Auction page.

Benefiting from Foreclosure-Auction.net

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