Foreclosure is the legal process by which a lender recovers loans of borrows failing to make loan payments by selling of the assets used as collateral against loan. When lenders take over a property, foreclosure auctions offer buyers a great chance to buy a property at throwaway price. Foreclosure auctionisthe simplest way to save money on real estate.
Properties being sold through foreclosure auctions are a good deal. However,bidding correct is really important in foreclosure auctions. Since, failing tobid correctly, you might get trapped into a deal that’s not worth the amount you’ve bid. To make sure you are doing everything correct when bidding at a foreclosure action, you must be aware of the following points.
Don’t get involved early
First, you need to get yourself updated about any auction that you are interested in. Gather all the information on regular basis and don’t rush for any deal without proper information. Develop a good tracking system to keep a keen eye on interesting properties. This way you’ll be able to get yourself involved in the most successful auction.
If you have found a property online, make sure you drive by the property to know about its current condition and neighborhood. It is even better if you could actually meet the owner to get clear idea about the property.
Confirm auction status and bidding procedure
Once the property is scheduled for auction, try to find out about the exact bidding procedure and it current auction status. The owner can stop the auction by paying the amount owed to the foreclosing lender. Plus, auctions can also get postponed without any notice, so you have to call the trustee to find out everything about the schedule beforehand.
Bidding procedure may vary from state to state. In some cases you need to pay the full amount as soon as the auction is over, on the other hand some agents ask you to pay only certain percentage of money and the full payment can be made later.
Don’t get in a bidding war
Just be calm and composed while bidding and don’t get into a bidding war without a considerable thought. The deal must be beneficial to you otherwise there’s no need to waste on a deal, which would be nothing but a complete loss.
Try to take as many cues from the other participants as you can, but don’t let them dictate how much you are going to bid. You may encounter many experienced investors who attend auctions every month. Such investors are not keen for a competition and know how to make or break a bid. You’ll also need some time to learn the trick, but you can try your best to avoid any rushed decision.
If you have won a bid, just make sure that the auctioneer hands over all the necessary documents to you. Documents including property papers and the ones declaring you won the bid, all must be in appropriate condition and legal form.
Clarify with the auctioneer and a real estate attorney if any further steps are needed to be made before you get the complete ownership. Trustees must evict the current owners. In case, the current owners are not evicted, then you have to take the charge. You can contact a local real estate attorney or other legal authorities for proper eviction procedure.
Buying a foreclosed property is different from anytypical resale purchase. The seller needs a preapproval letter from a lender before accepting any offer. Ensure that paperwork has been cleared before finalizing your deal.