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What Is a Foreclosure Auction?

Foreclosure Auction

A foreclosure auction is an event wherein foreclosed properties are being offered for sale and where interested buyers can bid for the properties they want. Properties offered in this sale are available at heavily discounted prices, which is why it is a highly favored option among homebuyers and investors.

For buyers interested in finding a home at a foreclosure auction, here are things you need to keep in mind.

1. Have a Firm Plan

First, you need to determine how much you can shell out. Set a limit on the amount you will bid and base it on your financial capability. Also, identify the type of property you want to purchase. Some properties at auction are outright foreclosures, while others are pre-foreclosure homes. The latter are properties that have not yet been foreclosed on, but have already entered the first stage of the foreclosure process due to the owner's failure to pay his loan on time. Both pre-foreclosure and foreclosed properties though, are offered at prices much lower than their original value.

2. Do Your Research

Before attending an actual auction, make sure that you have familiarized yourself with the properties being auctioned off. Focus on the ones that meet your budget plan and home specification requirements. You can gather information about properties that are up for auction in various areas of the U.S. from Foreclosure-Auction.net. This will allow you to compare prices and assist you in finding the home that meets your needs.

3. Visit the Properties

If there are still a few days before the actual auction, grab the opportunity and get around visiting the homes that interest you. Remember, the properties sold at foreclosure auctions are in "as is" condition. Hiring a professional home inspector is very important as he can give you an estimate of potential repair costs. You can also use this estimate when determining how much you will bid for the property.

4. Prepare Cash or Cashier's Check

You need to have cash at the actual date of the auction because if you win a bid, you will be required to pay 10% of the purchase price of the property right after the auction ended. This is an up-front payment and a grace period is out of the question. As for the remaining balance, it will depend on the terms set by the trustees handling the foreclosure auction.

5. Do Not Get Carried Away

For buyers who have never been to a foreclosure auction before, attending one for the first time can be both daunting and exhilarating. Always remember your plan and your budget limit and don't get drawn into a bidding war or you might find yourself purchasing a home that is beyond your means to afford. The high energy environment of auctions often results in some bidders competing for a property that, in reality, is way beyond their financial capabilities.

6. Complete the Deal

If your bid happens to get accepted, pay the 10% before you leave the venue. Winning bidders are usually given 60 to 90 days to come up with the rest of the payment, depending on which state the property is located. Once you have completed the payment, the property is completely yours. To be sure, immediately buy a title insurance to protect yourself from adverse title claims. Also, take note if there is a redemption period. It would be wise to hold off any planned repairs or renovation until this period expires.

Attending foreclosure auctions is certainly one of the surest ways you can buy and own cheap homes. But to enjoy convenience, you can simply choose to subscribe to the listings services offered by Foreclosure-Auction.net and gather relevant information on properties on the foreclosure auction block.

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