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Foreclosure Auctions: A Primer



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By : Karim El Sheikh    99 or more times read
Investing in foreclosure properties is a lucrative way to purchase property for personal or business use. Many properties can be purchased below the currently low market values making reselling quite profitable. Understanding the foreclosure auction process will help you secure a great deal.

Creating A System For Locating Properties

Foreclosure listings are updated daily. It is not uncommon for one interested buyer to watch several properties at once to secure the best deal. However, if you become sloppy in your research you may overlook the opportunity of a life time. Take the time to create a system that will allow you to track the properties being offered and their auction dates. These dates change often, so accurate tracking is necessary. As an additional benefit, tracking these sales will allow you to see what properties are being offered at the best price.

View The Properties In Question

When you have selected properties that you are interested in bidding on, take a drive to the area and perform some reconnaissance work. Make sure the neighborhood is up to your standards and that amenities, such as shopping areas and parks, are close enough to your liking. This also provides you a chance to view the prices of homes in the area and may even provide you a chance encounter with the current owner. Many deals have been made in this manner, helping buyer and seller both avoid the auction process.

Understand And Confirm All Details

As previously stated, auction dates often change. You may need to verify auction dates as late as the morning of the sale to confirm that it is actually being held that day. Lenders provide home owners the opportunity to pay their outstanding balance to the very last minute. Because of this an auction may cancel at any time.

You need to know the procedures for foreclosure auctions for the state the sale is being held in. Some auctions require the home to be paid for at the time of sale, while others may only require a deposit. Verify payment options with the auction company prior to attending the sale.

Know If The Property Is A Bargain Or A Nightmare

Do your homework before you place a bid on the property. Look into the market value of the property and properties surrounding the home. The opening bid on the home is going to be for the amount that is owed on the loan, this is standard practice. If the home owner was drastically upside down on their mortgage you may not be getting a deal at all. An opening bid on a property that is 20k higher than the market value is not a good deal.

Find out if the property has any liens against it that can be transferred to the new owner. These laws vary from state to state, so it is important that you know your rights and obligations. Tax liens almost always remain on the property, regardless of ownership.

Avoid Auction Fever

When you arrive at the foreclosure auction, make sure that you know what your bidding limits are and what you can afford to spend. This is especially important at auctions where the full amount of the bid is due at auction end. It is very easy to get excited during the auction process, the bidding can become chaotic and the desire to win overtakes the sensibility of the bidder. If you know your limit beforehand, you will avoid becoming trapped in a financial mess.

Make Sure You Have The Proper Documentation When You Win

Once you win an auction, you will be able to take immediate possession of the property. However, it is very crucial that you have all the proper documents from the auction house to ensure the transfer of ownership flows smoothly. Make sure that you receive a receipt for your purchase and payment, any documents showing the final auction price and bid amount and anything that shows you are the rightful owner.
Foreclosure.com is the top online resource for all foreclosures, preforeclosures, short sales, and rent to own home listings.

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