How to Purchase a House at a Sheriff's Auction

When a mortgage holder misses a large number of payments on his house, the lender may move to collect this debt by initiating a foreclosure, in which ownership of the house is seized. If the foreclosure is successful, the house will often end up for sale on the auction block. These auctions are often organized and managed by the local sheriff and are sometimes referred to colloquially as sheriff's auctions. For prospective homebuyers, sheriff's auctions can be an excellent opportunity to snag a bargain. However, those considering bidding should be familiar with the process before attending an auction.

Instructions

1. Attend a "practice" auction. Before you attend an auction where you intend to make a bid, sit through an auction that you're not interested in. You can can get a feel for the process, and the next time you attend an auction, it won't feel as intimidating.

2. Learn the bidding procedure. To the uninitiated, the bidding system at auctions can be enormously confusing. Bidding procedures vary by state and by auction house, so pick up an informational pamphlet at the practice auction and then watch the bidders in action.

3. Do your research. Nearly all foreclosure auctions post a notice of properties that will be included in the auction. Take a copy of this list and look at the properties that you are considering buying. Do as much research as you can on them, including a physical inspection, as well as research into public records, such as previous sale prices.

4. Prepare your bids. Identify all the properties that you are prepared to bid on and prepare the maximum price that you are willing to pay for each. Be aware that the home you plan to bid on may not appear at auction. According to RealtyTrac, homeowners that have been foreclosed upon are sometimes able to reclaim their homes before the auction begins.

5. Bring a check. In most cases, auctions will require that bidders put down a certified check before they are allowed to bid. According to Bankrate.com, this check is usually for about $5,000. If you put down the check and do not buy anything, it will be returned to you.

6. Keep your head. When bidding, attempt to leave emotion at the door. Based on your research, you should have a maximum amount that you are willing to spend for each property. Although its easy to get caught up in the frenzy of the auction, stick to the plan. If you don't, it can cost you.

7. Claim your prize. If you purchase a property, you will generally be required to put down a certain amount of money before leaving the property. Make sure that you have enough to cover the limits set by the auction house.

References

• Bankrate.com: How to buy foreclosures at an auction
• RealtyTrac: How to Buy a Home at Auction