Many people believe that one of the best ways to save on buying a home is getting a home at a foreclosure auction. However, this is not always true – especially if you don’t do it right. Make sure that if you head to a foreclosure auction you follow these steps to help ensure your success in buying a foreclosed home.
Being Prepared for the Foreclosure Auction
Foreclosure auctions can be overwhelming to first timers, so make sure you do your research before going to buy your home. Look into the laws and regulations in your state for foreclosure auctions. Make sure as part of your research you attend a few auctions beforehand to watch and learn how people do it. You will need all the confidence you can get before you go to the first auction where you are going to bid. Keep in mind: you will need to do the repairs so factor that into the price.
Auctions Where there are Foreclosures
You will need to look around to find an auction where there are homes that you like. You can get lists of homes which have defaulted on their mortgages from realtors and check newspapers for auctions. You can also find information at the U.S Department of Housing and Urban Development.
Get to Know the House
With most foreclosures you will not be able to look inside the house because it is being sold as is; but you can look at the outside. Go to the home and walk around the outside so you can see if there could be any large issues you will need to repair (like a new roof or structural problems). Also do research on the title of the home, making sure there are not any liens or mortgages against the home. Next, talk to a realtor about the potential value of the home in comparison to the homes around it.
Keeping Money in Mind
You may want to bid as low as possible on the home but that is not always the smartest way to bid. Banks will need to recover what is left on the mortgage which is where they will usually set the minimum bid. Ask the auction agent if they know what this price is.
At the Auction
Foreclosure auctions can be exciting and overwhelming which can lead to you losing out on a bid or overpaying for a property. You need to prepared with the highest amount that you are willing to pay so when placing your bids you are not overwhelmed with the end price. You will also need to have cash or a cashier’s check on you in order to cover the down payment. You will be asked to pay for the rest of the home shortly after.
Getting a foreclosure can be exciting in many ways. However, a foreclosure can also be more work – and money – than you bargained for, especially if you do not prepare yourself. Use the above steps to help familiarize yourself with the foreclosure auction process and put yourself in a position to reduce your potential on missing out on the home or overpaying for the property.