Foreclosure Auctions Explained

While the fact that foreclosures have skyrocketed in the past few years is detrimental

to the individuals who have lost their homes because of the mortgage crisis, it is good news for people who want to buy homes at low prices. The reason for the mortgage crisis is due to incredibly high interest rates on adjustable mortgages.

These auctions may seem like the perfect time to score homes for low prices but there are some things that you should be aware of before going to the auctions. These are some great opportunities to buy homes for prices below the market price that they are assessed at. Other people at the auction house are going to want to buy these homes as well.

- You need to determine how to keep track of all the properties that you have an interest in. You could do this on pen and paper or perhaps use a computer program to keep up to date on the details of each property you are interested in. You should also drive by the homes in order to see how they look and to ensure that you really do have an interest in them after the fact.

- Always be sure that you are aware of when the auction is going to occur and where along with how the rules are for bidders since they can vary from place to place. Sometimes there may be a laundry list of properties still waiting to be auctioned. You may get the best results and information by dealing directly with the bank's representative. Auctions are typically held in the same spot each month and procedures may be different depending on the reason for foreclosure, typically the two major ones are property taxes being behind or the mortgage payment not being paid. Also be aware of how much money is due immediately since some require the full balance in a check while others will take a percentage and require the rest of it to be paid by a due date.

- Learn all about the property. You should learn exactly how much is owed on it and if there are any liens against it or if the auction will cover the entire debt. This can be discovered through the process of finding a foreclosure listing or by using a company who holds the title

- Know just how much you can afford to bid and also what exactly will constitute a bargain for you. Some people recommend that 20% or more below the market value is a deal. You also need to be aware of what methods of financing you intend to get for the property. You don't want to get outbid or lose out on a great deal before it has the opportunity to be finished

- Actually go and bid at the auction when it happens. You may want to be sure of the time and place by checking with the bank trustee who has the details. You can watch the other bidders to see if they are going to bid for the first time or try to outbid you. Don't go and sit in the back without bidding and under the same rules don't overbid just because of pressure from others at the auction

- Learn how to get ownership. Be sure that you know the laws on what documents are required before you can be declared the owner but sometimes you need an attorney. It can take some time before you actually get ownership though from a few days to even a month or longer. Repairs should be avoided until ownership is fully assumed and evictions may need to occur if tenants live in the home.

by: Lori English

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