Sometimes some of the best homes can be found at a foreclosure auction. These are homes that the lender took possession of because the owner defaulted on his payments for a specific period of time.
It is important to note that the process takes place over a long period of time as the lender tries to give the original homeowner as many chances as possible to get current on their loan before initiating the foreclosure process. If you wish to purchase a home at an auction, there are some things you should know.
Know the Area
Many foreclosures are sold “as-is.” This means whatever is wrong inside the house is your problem. You do not get the benefit of having an inspection beforehand or to have a contingency on the contract that is dependent on the items getting fixed. In order to get around the lack of inspection, you can drive through the area at several different times throughout the day and week to get a feel for the area. You might even find that you can talk to the owners of the house if they have not moved out yet or the neighbors that might know something about the house.
The foreclosure auction process goes fast, which means you must be prepared for the process if you want to be successful. The trustee running the auction needs to make sure you can afford the home as you need to do so in a short amount of time. Without a preapproval letter it is impossible to prove you can afford the loan. The only other option is to pay cash for the purchase, but most buyers do not do that.
When you know you want to purchase a foreclosed home at an auction, start shopping for lenders. Find the one that will provide you with the most lucrative financing and then start the preapproval process. You will have to let the lender pull your credit as well as provide him with your income, asset, and employment documentation to secure the preapproval.
There are Rules
Every state has different rules regarding foreclosure auctions. Some are held right on the property while others are held at a centrally located area in the county the home resides. Sometimes the auctions are for one house and other times, multiple properties get auctioned off at the same time. Calling the treasurer in charge of the foreclosure can help you determine the steps to take. The more prepared you are for the process, the more likely it is that you will win the bid.
You Need Certified Funds
Every foreclosure auction has a specified amount of cash that needs to be put down up front. This is to show your sincerity in bidding on the home. The trustee will have the information regarding the amount of money any bidder needs up front. Once you know the amount of money you need, obtain a cashier’s check to provide the trustee. Some auctions require that every bidder provides their money up front to show their seriousness in bidding, while others only require it if you win the bid.
You Need Patience for a Foreclosure Auction
Above all else, you need patience when you want to bid on a home in a foreclosure auction. There are generally many bidders for the homes, so you need to be as prepared as possible. Taking the above steps can help you have a leg up on the competition because you will be well informed and have the right paperwork for the treasurer to approve your bid.
Taking the time to do you research will help you find the home you really want. Foreclosure homes go up for auction often, so checking the listings and doing your preparation work ahead of time can really help you. Sometimes it is not just the highest bidder that gets the home, but the bidder that has everything that the treasurer needs to get the process rolling. The idea behind the auction is to get the house off of the bank’s books, which needs to be done quickly so the bank can get back to making a profit once again.