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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.



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