Can Anyone Show Up at a Foreclosure Auction to Bid?
Foreclosure procedures are governed by state law and differ from state to state, but all types of foreclosure procedures provide for public sale of homes. The sale of such homes assists mortgage lenders in recovering their investment in defaulted mortgage loans. A foreclosure sale may be called a trustee's sale or a sheriff's sale, but both are public auctions where real property is sold to the highest bidder.
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Foreclosure Sales
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A real estate trustee or officer of the court may conduct a foreclosure sale. The foreclosing mortgage lender typically submits a bid for the amounts owed according to the terms of a mortgage or deed of trust document. The unpaid principle balance of the loan, accrued interest, foreclosure costs and fees and expenses advanced by the mortgage lender are calculated; the sum of these expenses is called the total indebtedness. Mortgage companies may bid the total indebtedness or may bid a lesser amount to encourage outside buyers to bid. In many cases, no one else bids and title to the foreclosed home reverts to the mortgage lender.
Notice of Sale: Terms and Conditions of a Foreclosure Sale
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Before conducting a foreclosure sale, a mortgage lender posts a Notice of Sale on the property, and publishes the Notice of Sale in a newspaper for a specified number of times prior to the sale date. The Notice of Sale indicates the time, location and opening bid amount as determined by the mortgage company's initial bid. Participants in foreclosure sales must be prepared to pay for the property with a cashier's check for the bid amount, or a with a deposit of a specified amount, which is usually 10 percent of the bid amount. The balance of the bid amount is due within a time period established by state law.
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Public Sale Means Public Access
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Foreclosure sales, whether called trustee's sales or sheriff's sales, are public sales of real property. Notification is posted and published to encourage bidders. Avoid scams connected with foreclosure sales; you don't need an attorney or a representative to participate in a foreclosure sale. The best way to gain information about a particular foreclosure sale is done by contacting the foreclosing law firm or trustee shown in the Notice of Sale.
Do's and Dont's
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Attend a few foreclosure sales to watch and learn how they work. Foreclosure sales may be posptoned; this is a frequent occurence and is announced at the original scheduled time and location for the foreclosure sale. Beware of foreclosure-related scams. Don't pay anyone to represent your interests at a foreclosure sale. Avoid buying foreclosure courses or books promising riches in buying foreclosed properties. Buying foreclosed homes sight unseen can be a great way to go broke. Homes may look fine from the outside, but inside they've been stripped of all valuables and/or are severely damaged. A safer way to purchase foreclosed homes is buying them from mortgage lenders' inventory of foreclosed homes.
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