A foreclosure auction is a unique way to own a property, and if you know the tricks of the trade, you can get a great deal. Seller’s auctions and foreclosure auctions are mainly two types of auctions conducted in real estate.
When the statutory time in preforeclosure has run out for the borrower, the lender auctions the property to the highest bidder. These auctions are open for all, however, the lender usually bids the full mortgage amount in addition to penalties, accrued interest and fees. Hence, your bidding has to be higher than the lender’s price.
Useful Tips To Get the Best Deals In Foreclosure Auction
Before you attend the auction, do some homework. When bidding on the foreclosure property at the public auction, it is not possible to retract the bid. Foreclosure bids however can be confusing for the unwary or inexperienced bidder. Properties undergoing foreclosure auction usually have no title insurance, hence the bidder might not know if the mortgage is first, third or seventh. In order to determine the payoff, it is important to know the order. You could purchase the property and pay off the foreclosing mortgage, only to find out that there are still higher mortgages on the property.
The chances of inspecting the property open for foreclosure auctions are almost negligible, hence there is a possibility that it might be damaged, or in need of costly and expensive renovation. If you plan to attend the foreclosure auction, drive by the property to gauge the condition of the exteriors.
And if you are planning to bid in the foreclosure auctions, keep your finances ready well in advance, as these sales are for cash. If you are an experienced buyer, and have attorneys and agents to guide you, you can consider buying the property at the foreclosure auction and get a terrific bargain, else, it is better to avoid them, as you might just end up losing your money.
When going to a foreclosure auction, you will need to carry 10% of the winning bid in cash or certified check. You then get 30 days to make the rest of the payment. Once you decide to bid for a particular property, make sure that you get to the site on time, as many auctions are over extremely quickly.
Once the auction starts, keep your enthusiasm under control. If there are other bidders, bid to the maximum amount you are willing to spend on that property, and then quit. Buying the property from foreclosure auction can be tricky, especially for novices with limited funds.
If you are going for a tax foreclosure auction, it is also helpful if you have good working knowledge of the rules, laws and regulations governing tax foreclosure sales before making any purchase.