How Do Foreclosure Auctions Work?
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Know the Process
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Before going to a foreclosure auction, it's a good idea to have some basic knowledge about the foreclosure process.
When a homeowner stops making payments on a home, the lender--by default--has a right to the property and can begin foreclosure proceedings. After the lender has begun the foreclosure process and informed the homeowner of the intent to foreclose, the lending institution must publish a record of the filing. Your local newspaper, or the local paper of public record, will publish a list of foreclosure proceedings before the auction is to take place.
On the Courthouse Steps
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Typically, every county has the same process when it comes to foreclosure auctions. An official or a lender's representative will read from a list of homes up for foreclosure on the courthouse steps. The bank's asking price will be read along with other important information, such as the address. (Note: If you want to check out a home in a surrounding area, you'll have to go to the courthouse where the home's trust deed is recorded.)
When each home is announced, the official takes bids from aspiring purchasers in increasing amounts until one has outbid all others and secures a winning bid.
If the home fails to sell, it remains the property of the lender. -
How to Pay
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When the bid is finalized, the winning bidder has his name and payment information recorded by a representative from the lending institution, typically a legal representative. In most counties, a down payment of at least 10 percent is due by the close of business the day of the sale. Some counties require a cashier's check for the entire purchase amount within a few hours.
Warnings
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If there is a tax lien against the property, the new homeowner inherits it, so you'll want to research the title before bidding on a home. Also, the home will be sold as is; if there are major problems with the home, they are the responsibility of the new homeowner.
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