How to Bid on Foreclosed Homes
If you are considering investing in real estate, look into foreclosures. A foreclosure can often be purchased below market value. Once a homeowner defaults on their loan, the home is foreclosed, and the lender sells the home at a public auction to recoup the loss. Some people steer away from buying foreclosures because they simply do not understand how to bid at an auction.
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Instructions
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Locate foreclosed properties. Check the classified section of your local newspaper for foreclosure sales. The sales may be listed under various categories, such as foreclosures, auctions or sheriff sales. When a home is scheduled for sale, the lender usually places an ad in the newspaper once a week, for a specified period of time, before the auction takes place. You can also check the county court website for information of foreclosure properties through public records. By researching the case information, you can view the sale-date and amount owed.
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View the property. Foreclosures sometimes have a viewing period before the sale date. This allows potential buyers to have a chance to see the property before bidding. Hire an inspector if you choose. If the home requires significant work, consider having a contractor walk through the property to give an estimate.
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Research liens. A lien is a legal hold on the property. If you purchase a property with a lien, the lien holder must be paid before the title of ownership can be transferred to you. Visit the tax records department of the county courthouse to conduct a title search. You can also pay for a lien search through Experian or another website providing lien search services.
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Inquire about payment methods. Each state has its own laws regarding foreclosure sales and auctions. In many states, the winning bidder must show proof of funds to cover the bid amount. A loan or line of credit are usually acceptable forms of payment. In some states, such as Oregon, the entire bid amount must be paid in cash after placing the winning bid.
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Arrive at the auction location. Auctions are held at the courthouse, property grounds or sheriff's office. The exact time a property will be on the auction block is usually not listed, but there are certain times auctions are scheduled to begin. Show up early to register.
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Understand right to redemption laws in your state. A homeowner may have the right to purchase back their home if they are able to supply the funds within the redemption period. The redemption period differs from state to state. In some locations, there is no redemption period.
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