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How to buy Foreclosure Property on Auction
of the best methods of buying foreclosure properties is
to buy them at a live foreclosure auction. As you are aware,
the property is sold to the highest bidder in any auction.
The first bid is typically made for the foreclosing lender
by whoever is representing that company and the bid will
generally be for the amount that is owed. If no higher bid
is forthcoming, the property ownership will automatically
be reverted to the lender. In most instances, no one attends
the foreclosure sale except the proxies for the lender and
those running the auction. This is particularly true if
there is no profit margin between what is owed and the market
value of a property.
As you are aware, a foreclosure takes place when a homeowner or property
owner cannot pay the mortgage fees on the property and is
forced to surrender the property to realize money to pay
back what is owed.
There is a step by step procedure
that you will have to follow if you want to buy a foreclosed
1. Find out the properties scheduled for
foreclosure sales by looking into the classified newspaper
ads for listings under Foreclosure Notices, Auction Sales
or Sheriff's Sales.
2. Notify local real estate agents and
attorneys that you're interested in purchasing foreclosed
3. Verify with local lending institutions
and government agencies - such as the Federal Housing Administration,
Veterans Administration or Department of Housing and Urban
Development for information about foreclosed properties
in your area.
4. Investigate and understand foreclosure
proceedings in your state.
It is important to inspect the
foreclosed property to determine its condition and market
1. Find out the sales prices of comparable
properties in the area from a local real estate agent.
2. Determine ownership, identify potential
problems and research any existing liens by conducting a
title search on the foreclosed property.
3. Contact the trustee of the foreclosure
sale to inquire about the minimum bid the lender will accept.
4. Make an offer on the foreclosed property
by bidding at the foreclosure auction or submitting a sealed
bid to a lender after the foreclosure sale.
First-time investors should note that foreclosure auctions are not the places for them to buy. Buying
foreclosure properties at auction well require heavy amounts
of cash or a large line of credit that you can tap into
quickly. If you have either of those resources at your command,
you can straightaway venture and find great buys at foreclosure
auctions. But you have to exercise caution as most of the
time the amount owed may not leave much room for profit.
The properties that do contain a meaningful amount of profit
will be attended by a bigger group of investors. The key
is to do proper pre-study, because any mistake you commit
can prove very costly. Please bear in mind that once you
bid, you must compulsively follow through with the purchase.
You cannot back out once you have committed to buy a foreclosure
property at an auction. So it is absolutely imperative that
you do proper homework. It would be wise all the calculations
beforehand so that you are aware how much profit is available
even before you consider bidding on a certain property.
Although it is rare, you can occasionally
find some great deals at foreclosure auctions. But it is
advisable to attend a few foreclosure auctions and learn
how the system works before you venture buying properties
at an auction.
Main Tips For Foreclosure Auctions
1. Learn more about the different types
of foreclosure properties, and the foreclosure process.
2. Secure financing at early stage.
3. Engage a real estate agent as a “buyer’s
4. Do your homework.
5. Make a realistic offer.