| You are probably already aware of the rise in home | | | | viewing. |
| foreclosures that has occurred in recent months. After | | | | 11. In most cases, the notice of sale is posted at the |
| all, it has been in the news almost daily for several | | | | county courthouse (in the county where the |
| months now. | | | | foreclosed property is located). |
| But what you may not know is that many of the | | | | 12. In most cases, the actual auction will also take place |
| properties that get foreclosed upon end up being sold | | | | at the county courthouse. |
| at real estate auctions for less than market value. | | | | 13. In addition to the notice of public sale (which is a |
| What this means to you, as a home buyer, is that you | | | | minimum requirement), the lender will announce the |
| can often save a lot of money by purchasing a home | | | | auction event through other channels as well, because... |
| at auction (instead of buying it through a traditional real | | | | 14. The lender wants a good turnout at the event, |
| estate transaction). | | | | because having a lot of qualified bidders will increase |
| With that in mind, I would like to offer you 21 important | | | | the likelihood of a quick sale. |
| points about this topic. There are some of the things | | | | 15. The lender wants a quick sale above all else, |
| you should know before attempting to buy a home at | | | | because they are losing money and wasting other |
| a real estate auction. | | | | resources by keeping the non-performing (unpaid) loan |
| 21 Things You Should Know | | | | on their books. |
| | | | 16. In true auction fashion, the attendees will bid on the |
| 1. The process leading up to a foreclosure can last up | | | | property and it will eventually be sold to the highest |
| to five months. It starts when the homeowner defaults | | | | bidder. |
| on the loan, but it can drag on through various stages, | | | | 17. After the home is sold, a deed will be given to the |
| depending on what state you are in. | | | | successful bidder. This person is now the new owner. |
| 2. Because of this lengthy process, you need to be | | | | 18. The starting price for a home being sold at auction |
| flexible, patient and persistent, all at the same time. | | | | is normally based on the amount owed to the lender |
| 3. At some point, the lender will file a notice of default | | | | (combined with other expenses the lender might have |
| against the homeowner, which formally begins the | | | | incurred when foreclosing on the property). |
| process of foreclosure. | | | | 19. Overbidding is a common mistake among first-time |
| 4. From a legal perspective, there are two types of | | | | attendees. This will drive up the price of the home and |
| foreclosures -- the judicial and the non-judicial. As you | | | | defeat the purpose of buying through an auction. The |
| would imagine, the former takes place in court and the | | | | purpose for investors is to obtain a property below |
| latter takes place outside of court. | | | | market value. |
| 5. Most foreclosures in this country are of the | | | | 20. In most scenarios, attendees must have financing |
| non-judicial variety, meaning they never go to court | | | | lined up before they will be allowed to bid on a |
| before a judge. | | | | property. For obvious reasons, real estate auctions are |
| 6. The non-judicial variety is also referred to as a | | | | typically cash-based. |
| "power of sale" foreclosure. It allows the trustee to sell | | | | 21. Most homes sold in this way are sold as-is with no |
| the property more quickly (on behalf of the lender) by | | | | warranties of any kind. So if you have the chance to |
| avoiding a court process. | | | | inspect the property before bidding on it (even if it's |
| 7. During the pre-foreclosure stage, the homeowner | | | | just a cursory walkthrough), take that opportunity. |
| may work with the lender to get back on track with | | | | Obviously this article does not cover everything you |
| his or her mortgage payments. | | | | need to know about buying a home through a real |
| 8. Also during this stage, the homeowner could sell the | | | | estate auction. Entire books have been written on the |
| home before the bank forecloses on it, typically | | | | subject, and you should read those too. But this article |
| through what's known as a real estate short sale | | | | will help you understand the basic process that takes |
| process. | | | | place, and therefore shall serve as a good jumping-off |
| 9. If the homeowner fails to (A) get back on track with | | | | point for your further research. |
| mortgage payments or (B) sell the house via short | | | | With that in mind, I recommend you print it out and |
| sale, the property will move along the path to a real | | | | highlight the areas where your knowledge is lacking. |
| estate auction. | | | | Then, learn as much as you can about those areas. |
| 10. About 20 days before the real estate auction is to | | | | Good luck! |
| take place, a notice of sale will be posted for public | | | | |