How to Purchase Foreclosures in Sales at the Courthouse
When a bank seizes a home due the homeowner's failure to pay his mortgage, it will attempt to sell the property in a foreclosure auction conducted at the courthouse. Real estate investors may attend the foreclosure auction, purchase a home and either resell the property for a profit or turn it into their private residence. Banks often sell homes at a foreclosure auction for the amount the previous homeowner still owed on the mortgage. In some cases, this can allow you to purchase a home with instant equity.
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Instructions
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Attend a foreclosure auction before you are ready to purchase a home. The bidding process varies depending on the location of the auction you attend. By attending an auction as an observer before you plan to buy, you will become familiar with the process.
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Evaluate your finances ahead of time and secure financing for your purchase, if necessary. Depending on the courthouse, you may be expected to pay for the property immediately or within several days after the auction occurs.
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Call the courthouse and get a list of the addresses for each property that will be sold at the next foreclosure auction. Drive by the homes and check their exterior condition to the best of your ability. It is unlikely that you will be permitted to enter the home to check for damage, but you can look at the place and the surrounding area to gauge whether it would make a sound investment.
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Call the trustee the day before the auction is scheduled to take place to make sure the properties you are interested in are still scheduled to be sold. Homes are sometimes redeemed by the homeowner at the last possible moment or held over by the bank for legal reasons. Should this occur, the auction trustee can inform you of when a new auction is scheduled.
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Arrive at the auction on time and bid for the property you want using the standard bidding method in your area.
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Pay for and take legal possession of the property if you win.
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Tips & Warnings
Some states offer a redemption period for the previous homeowner in which she has the option to purchase the property back from you within a set time frame. The law in these states requires you to return the property to the previous homeowner if the amount you paid for the property is returned to you. If your state has a redemption period, do not make expensive repairs to the home until the redemption period has expired to avoid losing money.
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- Photo Credit house image by Cora Reed from Fotolia.com
