According to RealtyTrac: Foreclosure Real Estate Listings, during the month of December 2012 one out of every 810 housing units was hit with a foreclosure filing notice. That is not good news for those living in the homes being foreclosed on, but for anyone wishing to buy a home at bargain basement price, there is reason to rejoice. However, that rejoicing may turn into dismay if you don’t know the best practices when participating in a bank foreclosed auction.
Become Familiar With Foreclosure Auctions
Before actually participating in a bank foreclosed auction, attend smaller auctions just to get familiar with the proceedings. You will learn a lot by observing what takes place there and it will help you be prepared when the time comes for you to throw your hat into the ring.
Research Properties
Doing your research is one of the best ways to get the right home at a price you can brag about. That research should be conducted on multiple homes instead of just one. Make sure to attend open houses when they are held to do an inspection of the homes in question. If you are not familiar with rehab projects, bring a pro with you to help with the inspection. This will give you a better idea of what it will cost to bring the home up to your own living standards.
Research The Market
Another area of research you should attend to prior to attending auctions is to get a good understanding of what homes are selling for in the neighborhood. Realtors are typically more than happy to provide you with comps because they would like to win your business. These comps will let you know whether you are getting a good deal at auctions, and what the home will be worth when it is renovated if that is required.
Title Search
Sometimes, there are other encumbrances on foreclosed homes than the original mortgage. Just by listening to the auctioneer, you may be able to get an idea about whether or not this is true on the homes that spike your interest. The auctioneer may say something like “this property is being sold subject to all encumbrances and liens” so this should be a red flag. By doing a title search on properties for sale, you will know ahead of time what you will be getting into if you do purchase the home.
Be Prepared
When you find properties on which you would like to bid, make sure you are prepared to participate in the auction. Bring all the information, including pictures and details of the properties with you to the bidding location. This will help you keep everything straight in your mind while on the courthouse steps. Most auctioneers want to see proof that you are serious and ask that bidders bring a certified check made out to themselves and signed over to them just to demonstrate intent. The check is returned to you if you are not the winning bidder.
Finally, you must be prepared to pay for the property as soon as the auction is completed.
