How to Purchase at a Foreclosure Auction
Foreclosure auctions are sales sponsored by banks and other lending institutions. When mortgage loan payments are missed and subsequent collections attempts fail, the property goes into foreclosure and the bank repossesses it. The lender then attempts to sell off the foreclosed property in an effort to recoup their initial investment in the mortgage loan. Because of the likelihood of ending up with a home at a significantly reduced price, auctions of foreclosed homes are considered an investment opportunity.
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Instructions
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Determine the specific property or properties you are interested in purchasing through foreclosure auctions. Ask a real estate agent or look online at sites such as BankForeclosuresSale.com (see the Resources section). Retain all of the paperwork and information you acquire about the property.
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Order a comprehensive title check on the property. You can do this yourself by searching public records at the county clerk's office, but a title search company or attorney may be capable of doing a more thorough job. The title check helps verify that there are no additional liens or taxes owed on the property that you, as a new owner, would be responsible for.
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Visit the property and have an inspection performed, if possible, to assess the condition of the home. When you can't actually tour the property, endeavor to find out as much about it as possible through paper channels, such as property tax records and past real estate listings for the home.
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Verify the details for the foreclosure auction. In addition to noting the date and time of the sale, you also need to know the particulars of the auction and payment process prior to arrival so that you are prepared to act swiftly if you win.
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Decide on the maximum amount of money that you want to bid on the property. Arrive at the auction with enough cash or a cashier's check to cover the auction specific percentage of your winning bid that you must pay immediately upon winning.
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Bid on the property you are interested in purchasing. Do not place a bid, however, that exceeds your ability to pay. If your maximum is reached, leave and begin the hunt for another property.
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Obtain documentation from the auctioneer that verifies that you are the auction winner and the next steps in the process, including when the balance you owe on the property is due and when you take full possession.
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Pay the balance on your winning bid within the specified time frame and the foreclosure auction transaction is completed.
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