During the past year, approximately 677,000 property owners faced foreclosure. Although this number represents a significant decrease since the Great Recession 0f 2008, many families endured the disappointment of losing their properties. Whether you are in the midst of a property foreclosure or you are thinking about buying a foreclosed property, you may be wondering […]
During the past year, approximately 677,000 property owners faced foreclosure. Although this number represents a significant decrease since the Great Recession 0f 2008, many families endured the disappointment of losing their properties.
Whether you are in the midst of a property foreclosure or you are thinking about buying a foreclosed property, you may be wondering what happens at a foreclosure auction. Here are a few details that will provide you with insight into a foreclosure auction.
How to Find a Foreclosure Auction
At an auction, many properties are sold for significantly less than their market value. This means that a person who has a good amount of cash can get a good deal. When homes are foreclosed, they are listed in several places. Banks list foreclosed properties on their websites. In many instances, they provide the contact name of the auction company.
Another place to find foreclosed property is on government websites including Housing and Urban Development (HUD). Generally, these homes are listed on the website ‘as is’. If you decide to purchase a government-owned property, you will have to purchase the property without inspecting it.
The most prominent place to find local foreclosures is your local county courthouse. Since most home auctions are held on the courthouse steps, you can find a list of properties for any upcoming auctions.
Foreclosure Auction Process
Once a foreclosure auction has been scheduled, it usually begins on time. If you plan to go to an auction, plan to arrive at least 30 minutes before it is scheduled to begin. An auctioneer manages the foreclosure auction process. Prior to the beginning of the auction, the auctioneer will review the auction procedures with the participants. Due to bankruptcy filings or legal issues, some property foreclosures will be canceled. The auctioneer will read the list of foreclosures that have been removed from the auction list. When the auction begins, the auctioneer reads the address of the first property and starts with an opening bid. Bidders bid against each other until the person with the highest bid wins the property. It’s important to note that auctioneers require bidders to show their cashier checks before the bidding begins. This prevents people who don’t have the money to purchase the property from getting involved with the property bidding process.
Winning bidders are required to provide the auctioneer with the total amount of the bid. After they provide the cashier’s checks, they will be required to complete a few pieces of paperwork. Once the paperwork has been completed, the auctioneer will provide the winning bidder with proof of payment and documents for the property. The winning bidders are on their way to becoming the new property owners.
Each state has different foreclosure procedures. In Florida, property owners are entitled to a right of redemption period. This means they have up to 10 days after the foreclosure auction to pay the entire amount of the unpaid mortgage in addition to attorney’s fees.
After the right of redemption period has ended, original property owners aren’t able to reclaim their homes. The court will ratify the property sale. The highest bidder will become the legal owners of the property.
While it’s true that bidders can expect to save up to 30 percent on the price of the property, purchasing an auction property has potential drawbacks. Here are a few.
- You won’t be able to tour the home. In many instances, the original owners remain in the home until they are forced to leave. For that reason, you will only be able to view the property’s exterior. You won’t be able to determine if the appliances are missing or the interior has been destroyed.
- You may have to spend thousands of dollars after you purchase the property. When property owners fail to pay their mortgage, they often neglect other bills that are related to the home. These bills include property taxes, HOA dues and utility bills. You will be required to pay these expenses.
- The property may have multiple liens on it. Auction companies don’t disclose the liens on properties. It’s important to know information about a property’s liens before the auction. A real estate attorney can conduct a lien search on your behalf.
- You may have to evict the original owners. Some owners will voluntarily leave the property. Other owners become angry and refuse to leave without an eviction notice. In some states, the eviction process can take months. You will have to incur the costs of the eviction.
- Buying a foreclosed property can deplete your emergency fund. Purchasing a foreclosed property at an auction can be an expensive undertaking. If you purchase a property without knowing the process, you may lose money on the deal.
By understanding the foreclosure auction process, you can find a great deal on a property in your area.