Buying property through foreclosure auction can be a good way to obtain real estate at discount prices. However, it is crucial to understand how the auction process works before submitting bids. Otherwise, buyers could end up with a cheap house that ends up breaking the bank.
Properties sold through foreclosure auction often require substantial repairs to return them to livable condition. Attendees do not have the opportunity to have properties inspected to estimate repair costs.
While a home might be sold for pennies on the dollar, repair costs can quickly add up. In many cases, repairs cost as much as it would to buy a home in good condition from a private seller. Additionally, many foreclosure homes have creditor judgments, tax liens, and second or third mortgages attached which must be removed by the buyer before property titles can be transferred.
Another consideration of buying houses through public auction is there are times when evicted homeowners refuse to leave. If buyers purchase a home that property owners still reside in they will be responsible for the cost of the eviction process.
Buyers should research their states' foreclosure laws to determine if a redemption period is offered. Some states allow foreclosed property owners the option to repurchase their home from auction buyers within 30 days of the sale.
Although this rarely happens, it can be devastating to lose real estate. While buyers recoup the cost of the property purchase they may not be entitled to refunds for repairs initiated prior to the homeowner reclaiming the house.
Submitting bids at foreclosure auctions can be somewhat intimidating for those new to the process. It's important to establish a maximum purchase price and stick with it. It is easy to become enthralled with the bidding process and bid more than desired. Once a bid is placed it cannot be retracted, so be cautious.
Auction policies and procedures can vary greatly. Much depends on the auction company hosting the sale. When possible, obtain copies of auctioneer's policies prior to attendance. It can be helpful to attend an auction or two before bidding on properties. Better yet, attend with a person who is familiar with buying property through auctions.
Foreclosure auctions can take place at a variety of locales. Some are conducted at public venues such as local fairgrounds. Others take place in courtrooms or in front of the foreclosure property. Public auctions are often published in real estate magazines or local newspapers. Most are listed through each states real estate commission or county Trustee.
It auction properties are listed prior to the sale it can be beneficial to obtain comparable sales reports to evaluate current market values of property listings. This information can be obtained from local real estate agents or realty websites such as Realtor.com. Comp reports can be invaluable in determining if prices of foreclosure listings are a good deal.
Once buyers present the winning bid on auction real estate they must record property transfers through local courts. The length of time required to transfer property deeds depends on the state where real estate is located.
Many states allow instantaneous transfer while others entail court confirmation of the sale. Others require buyers to wait out the redemption period which grants foreclosed property owners time to reclaim their house.
It might be necessary to consult with a lawyer or foreclosure specialist to ensure property deeds are transferred and recorded according to state law. As long as buyers conduct due diligence and become familiar with policies and procedures, buying real estate through foreclosure auction can be rewarding and profitable.
Article source: http://www.appraisalarticles.com/General-Real-Property-Topics/General-Real-Property-Topics/General-Real-Property-Topics/Foreclosure///3035-Tips-For-Buying-Real-Estate-Through-Foreclosure-Auction.html