subject: Foreclosure Auction Quick Cash [print this page] A foreclosure auction takes place when the mortgage company decides to sell a property to the highest bidder when even after a stipulated period the homeowner is not able to pay the default amounts due on the house. Acquiring a property at a foreclosure auction comes with its share of pros and cons for the intending investor. If you are a first time bidder there are many things you need to know about foreclosure auctions.
The first thing you need to do is be aware of the properties on auction. Glean all the possible information about the property that has caught your eye. You can try and visit the house and also casually meet up with the owner to get a clue about the condition of the house. You also need to figure out the market value of the property and the amount owed on it. An advantage of purchasing house at a foreclosure auction is that most liens with the exception of tax liens are snuffed out. Besides you don't need to deal with homeowners as closely as you would have to deal with them during the pre-foreclosure stage.
However, if you intend bidding at a foreclosure auction you need to have ready funds. This is because in case you win you'll have to put down a cash deposit equivalent to around 5 to 20% of your total bid. Moreover, you have to make sure that you have the rest of the funds handy because once you win the property you'll have to supply the rest of the money within the week.
Bidding at a foreclosure auction is simple but you have to refrain from getting carried away especially if you are a first timer. Generally the opening bid is fixed based on the amount owed on the property and the legal and other fees associated with the foreclosure. Set a ceiling on the amount you intend to bid and don't go beyond that. After all you don't want to end up paying more than what the property is worth. Besides, if you win the property and are not able to pay the balance amount within the stipulated period you stand to lose the cash deposit. So exercise thrift and caution during the bidding process.
Advantages of Bidding at a Foreclosure Auction
Most of the liens are done away with before the property reaches the auction stage.
You don't have to deal with homeowners on a very personal level. So this way you can avoid dealing with stressful emotional situations.
All you have to do is bid for the property, win it and walk away with the deed. So the process is simple and hassle free.
Disadvantages of Bidding at a Foreclosure Auction
You don't get much of an opportunity to inspect the property and get an idea of its condition. Sometimes the repairs you need to carry out may cost you a bomb.
You need to have your cash ready because once you win you are given very little time to make the payment
.Sometimes there is cut-throat competition among bidders and other investors do not take too kindly to a new investor.
Getting a property at a foreclosure auction comes with its benefits and drawbacks. But if you do your research and learn the art of bidding at auctions, purchasing a property at a foreclosure auction may be a smart thing to do.
