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A foreclosure auction is held when banks repossess houses and want to sell properties to clear mortgage loans from their books. Bidding on properties can be intimidating for individuals who have never attended a public auction. Taking time to understand the process can ensure buyers obtain the best deal.
Foreclosure auction procedures can vary, so it is best to become familiar with auctioneer procedures and policies prior to placing bids. Some auctions require bidders to pre-register and pay an entry fee. Others require down payments to hold the property after the winning bid has been placed. Most require payment in full within 24 hours of bid acceptance.
Public auctions are held in a variety of locations. Some take place at courthouses, while others are held at the property being auctioned. When banks sell multiple properties at once they often host auctions at public venues such as county fairgrounds or business centers.
Foreclosure auctions are generally listed in the real estate Classifieds section of local newspapers. When auctions encompass multiple properties, the bank or auctioneer might take out TV and radio ads. Individuals can also contact their states’ county Trustee or real estate commission for a list of upcoming foreclosure sales.
Auctioned real estate prices are derived from the outstanding first mortgage loan balance against the repossessed property. If more than one mortgage exists, or if creditor or tax liens are attached, the buyer is responsible for unique silent auction ideas settling outstanding debt. Bidders are provided with property prices prior to the auction and required to submit bids equal to or greater than the listing price.
Buyers should conduct due diligence to determine the current market value of foreclosed property prior to attending the auction. Buyers can obtain comparable sales reports from real estate websites such as RealtyTrac or Realtor.com.
It is also a good idea to search public records pertaining to the property to determine if liens or judgments are attached. Property records are stored at the local county recorder’s office. Many counties offer public records via their website at no cost or a nominal fee.
Once the information is gathered, buyers should establish a ceiling price for the maximum bid on all properties they are interested in buying. It is easy to get caught-up in auction frenzy and bid more than should be paid.
After winning a bid, buyers must follow the procedures outlined by the auctioneer. Buyers must obtain the necessary documents to commence with final payment and transfer property records. The amount of time required to transfer real estate depends on the state where the foreclosure is located.
In some states, ownership can transfer within a matter of days, while others require the sale to be confirmed through the courts. It is important to determine if a redemption period is offered which allows foreclosed homeowners to buy the property back from the individual who placed the winning bid at auction. Typically, redemption must occur within 30 days.
Buying houses through foreclosure auction can be rewarding and profitable, as long as buyers understand how the process works. It is a good idea to attend a few auctions and become familiar with the jargon, bidding process, and auctioneer procedures. It is also a good idea to consult with real estate professionals such as a lawyer or foreclosure specialist to determine if buying properties through auctions is the best choice.