An Auction Guide for Buying a Foreclosed Home
As many people have already picked up on, purchasing a foreclosed home
at an auction can potentially save you a tremendous amount of money, but
only if you understand all of the possible legal restrictions and costs
involved. Foreclosed homes that are sold at auctions are typically
supervised by county sheriffs, so the actual procedures and regulations
may vary depending on what state you are in. For instance, you may need
to pay the entire cost of the home on the same day of the auction in
some states while in others you may be able to make a non-refundable
deposit and pay the remaining balance within a specified timeframe. It
is possible in some states for the original homeowner to redeem their
house by paying the amount due within a specified number of days
following the auction. You certainly would not want to move in or make
any repairs until you are certain that timeframe has passed if you live
in one of those states. As you can see, the legal requirements can vary
quite a bit so it is important to make sure you fully understand the
requirements in your state.
When you are ready to purchase a home at an auction, start by locating a
schedule of the auctions for foreclosed homes in the area that interests
you. You can do this by contacting the county clerk at the courthouse
for that county. Be specific and ask for information on mortgage
foreclosure, not tax foreclosures.
Prior to the auction, spend some time becoming familiar with the laws in
your county so that you will be fully aware of possible restrictions and
requirements. In some counties you may be responsible for paying for any
other liens that may be attached to the home. You should also make sure
you understand how payment is to be made if you win at the auction and
when you are required to make the full payment. Also, check on whether
there are any other costs that may be associated with purchasing a
foreclosure at the auction, such as expenses for preparing the deed. In
addition, you should be sure you understand who will be responsible for
evicting any current occupants, when you should start insurance on the
home and how to determine if the property has a clear title.
It is also important to be sure you are familiar with the bidding
procedure at auctions for your local area. There may be some information
on the procedure posted at the courthouse, the best course of action is
to attend an auction ahead of time and learn by observing.
Next, choose a property that interests you and make sure that you
research that property as thoroughly as possible ahead of time while
also determining what you can reasonably afford to bid on the property.
Take a look at other homes that have sold recently in the same
neighborhood to help guide you in determining what you should bid.
Remember as well that you may not be the only person making bids on the
day of the auction.
Prior to the day of the auction, make sure you have your money together.
If you are required to have the full amount, you may need to have a
cashier's check. If you are only required to make a deposit, you should
be certain ahead of time that you will be able to obtain a mortgage to
pay the remainder within the required timeframe. If you are not able to
obtain a mortgage within the timeframe required by that county, you may
forfeit the house and lose your deposit so this is an important step
that should not be overlooked.
Keep in mind that if you do win the auction, you should make a point to
obtain the documents from the auctioneer after the auction to prove you
now own the property. It is also a good idea to consult a lawyer to
ensure the deed is transferred property into your name after the
auction. If there is any redemption period that applies in your county
or state, wait until that period has passed before you attempt to take
possession of the home.
Purchasing a foreclosed home has the potential to save you quite a bit
of money but it is important to make sure that you are fully aware of
the potential pitfalls involved and that you are prepared ahead of time.
Following these steps will help you to do so.