Thinking About Buying A Foreclosed Property

(As the amount of foreclosures begins to increase throughout many parts of the nation, you may find yourself becoming interested in buying a foreclosed property.)

What many people do not realize is that most foreclosed properties are bought at auctions, and although buying a foreclosure can yield a great bargain, there are many things to be aware of and some disadvantages as well.

Buying foreclosed property is not something you should do if you are unfamiliar with the home buying process in general, but if you think this is something you want to do, be sure that you do your research first.

A recent article posted on legalwiz.com by William Bronchick, “Buying at the foreclosure auctions,” explains the process in detail to those people who may be interested in participating in an auction to buy a foreclosed property.

“Perhaps the most well-known method of obtaining foreclosure properties is buying them at the auction. The foreclosure auction is a live bidding process, just as you may have imagined. The auction is typically conducted at a public place, such as a courthouse or even at the property itself.”

Just like any other auction, the property goes to the high bidder.

“The first bid will usually be made by a representative of the foreclosing lender. The lender can bid up the amount that is owed to him, without actually tendering money. If nobody else bids, the lender gets the property. In a majority of cases, nobody will show up but the auctioneer and the lender’s representative. Thus, in most cases, the lender gets the property; the less equity in the property, the less people that show up at the auction.”

You can usually find listings for foreclosure auctions in your local newspaper or by doing a quick search online. There are also information service providers that you can subscribe to that will give you listings of foreclosure auctions on a regular basis.

Now this may sound very easy, but there are a couple of catches to buying foreclosed properties at auctions.

One is that many times, you do not even get to thoroughly inspect the property before you buy it. There will be no showings of the property, so it is up to you to drive by and get a good look at the property in advance of the auction. Just assume that pretty much any foreclosed property is going to need basic repairs and upgrades like new paint and a good scrubbing.

Another drawback to buying a foreclosed property is that most of the time you must have the cash ready and available at the auction, there is no financing.

“Buying at the auction is not for everyone, especially beginners with limited funds. You need cash, and lots of it, to buy properties at auction. If you have access to a large credit line or have a money partner, you can sometimes find real bargains at foreclosure auctions. Do not get too excited, though, because most properties either have too little equity for people to bother with, or have so much equity that a large crowd will show up to compete. Despite what you see on late-night television, a real steal at the auction is very unlikely.”

The main thing to remember if you are thinking about buying at a foreclosure auction is that you cannot back out of your decision and be sure that you do your homework!

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