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Buying A Foreclosed Home At Auction? Remember These Tips!

Wednesday, November 29th, 2017
tips for buying houses at auction

There are publicly-held auctions, also known as trustee sales, where you can bid on a foreclosed home. If you are considering the purchase of a foreclosed home at an auction, there are some things you should be aware of before you bid. There are potential pitfalls for you to be on the lookout for to avoid a financial crisis as well. By following these five tips, you can get a good home at a great price.

Begin by doing some research

If you are thinking about purchasing a home at auction, do your homework before jumping into the bidding process. Check out the list of homes coming up for sale and know what the minimum bids will be for each. If you can, it may be a good idea to drive through the area where the property is located. You may not be able to enter the property up for auction, but you’ll still get a lot of information from the outside view and its location.

Know how the home ended up at auction

Real estate property will come up for auction when a homeowner has fallen too far behind on their mortgage payments. A mortgage contract states if the property owner does not meet the terms of that contract, the lender can begin the foreclosure process. Homeowners are given several notices and chances to come up with the delinquent payments. However, if they are unable to come up with the money, the home will then be put up for sale or auction.

Another situation which can put a home into a trustee sale is if the homeowner has fallen behind on property taxes. When the taxing authority or a trustee takes possession of the home, they will then try to recoup what has been lost on the home by selling it at an auction. Once the home is sold, the party with the winning bid takes immediate possession of it, and the previous owner will have to leave.

Inspect the property before bidding

There are circumstances where a trustee will allow an inspection of the property before the auction. At other times, you will be bidding on an as is sale. With an as is sale, you will not be allowed to inspect the home until you’ve won the bidding.

You may run into some situations that you should be aware of with a purchase of this nature. There could be structural issues in the home or liens against the property which become your responsibility. There may even be people living on the premises that you will have to evict. Buying a foreclosed home at auction may also get you a house that needs a lot of repairs or renovations. If the previous owner was not able to make payments on the home, chances are, they were not able to keep it in good condition.

Be pre-approved before bidding

Before you attend a trustee auction, make sure you’ve received approval for a loan for the estimated value you expect to pay. You should be given a tentative approval letter from the lender which will verify your mortgage has been approved for this amount and a specified period. This letter will be granted after the lender has reviewed your assets, income, debts, and credit history.

Consider bringing cash to a foreclosed home auction

The bidding will begin at a certain price, and the trustee will establish a minimum bid that will be accepted for each property. The amount of the bidding price will include the balance of the loan on the property and any lawyer’s fee that has been generated. All other costs involved in the foreclosure proceedings will also be included in the price. Trustee sales generally ask that you come with a cashier’s check or cash in case your bid is accepted. Before the bidding begins, you may be required to put down a cash deposit. This ensures the trustee that you will be able to proceed with the purchase.

Attending a property auction

When you attend a foreclosed home auction prepared and have a set amount in mind that you will bid, you can come away with a great property. Call High Plains Auctioneers at (806) 244-6776 if you have questions on how the bidding process works or about how to sell at auction. We have the experience to help you with any auction information. You can also Contact Us by email and view our Upcoming Auctions.