Properties
that are not sold during pre-foreclosure inevitably end up being
offered for sale at a trustee sale or public auction. If you don't wish
to negotiate with sellers during the re-foreclosure stage - or
otherwise wish to invest in properties being auctioned - here are some
useful hints and tips for buying at such an auction.
Firstly, I urge you to observe a few auctions before buying at one. The
newspaper will publish notices containing the dates and times of
various foreclosure auctions. Go and attend some of these to get an
idea of what is involved.
Some of the things to note are the process of the auction, how to
register as a bidder, the requirements regarding paying for a property
(e.g. whether you need a cashier's check or certified funds on auction
day and when you must pay the balance), and how professional - and
inexperienced - bidders handle the bidding.
When you decide to participate in an auction, the main thing is to
stick to your budget and not get caught up in the emotion and
excitement of the auction proceedings. A representative from the bank
will typically make a bid that covers the mortgage. From here, the bids
will go either two ways. Up or nowhere.
Assuming that the bids go up, and you keep to the maximum amount you're
willing to pay, you may or may not end up purchasing the property. If
you don't end up getting it, don't worry too much about missing out.
You win some, you lose some! At the very least it is a learning
experience. And if you've done your figures right, you have probably
avoided getting yourself into a dud deal.
Meanwhile, auctions are still great places to network with other
investors and foreclosure real estate agents, which is bound to assist
your business long term.
If you do end up buying a property, then - depending on where you live
- you should be aware of the concept of "redemptive rights". In certain
states, within a specified period of time - from a few days to a year -
the person whose property was foreclosed has the right to re-purchase the property.
If these rights apply in your state, be very wary of bidding a high
amount, let alone spending a lot of money, on a property you buy at
auction. The last thing you want is to spend a lot on improving the
property only to have it bought back. While you will be paid for the
property and such improvements, you probably won't make a profit.
Considering that you could have invested your money, time and resources
elsewhere, this is a huge opportunity cost to be avoided.
If no one bids on the property at the auction, the bank will be forced
to buy the home. In this case, the home becomes "real estate owned"
(REO) and anyone who wants the property will need to negotiate directly
with the bank.
For more hints and tips about buying property at a foreclosure auction,
make sure you get over to my site in the resource area.