Understanding foreclosure auctions

Prospective home buyers are always looking to buy the best property for the lowest possible price.

One of the best ways to accomplish this is by buying a foreclosure home at an auction. But there are certain important things you should understand before going to one of these auctions.

Jeanette Joy Fisher’s article, “ How to Buy Foreclosure Properties at Auction,” published on ezinearticle.com, provides the necessary information to help you feel comfortable and confident when purchasing a foreclosure home at an auction.

A foreclosure auction is generally held at a county courthouse or some public meeting grounds. The foreclosure will most like be conducted by either the county sheriff or a deputy appointed by the court. Regardless of who conducts the auction and where, there is one constant result; the highest bidder will get the house.

“The first bid is typically made for the foreclosing lender by whoever is representing that company. The bid will generally be for the amount that's owed, although there doesn't have to be any actual exchange of money involved. If no one else puts in a higher bid, property ownership reverts to the lender.”

“In the majority of cases, no one shows up for the foreclosure sale except the proxies for the lender and whoever may be running the auction. That's especially true if there's no room for profit between what's owed and the market value of a property.”

It is not suggested to buy a property at a foreclosure auction, because you will either need to have a large sum of cash or an easily accessible large line of credit.

If you have access to these funds you may be able to buy a great home, but be careful because the amount owed on the home usually leaves very little room left for profit.

“If you want to check into auctions yourself, the first thing you have to do is find out which publication is used to list them. Often it's the legal section of your local newspaper, although some larger cities use specialized business papers to advertise foreclosure sales. There are also various services that will notify you of foreclosures in your target area if you subscribe. If you happen to be interested in a particular property, you can contact the firm in charge of the auction for information about the time and place of the auction. Call the day before the auction to see if the defect has been cured or the sale has been delayed for some reason.”

It is vital to remember that if you bid on a property you are obligated to follow through and purchase it.

You should do research on the various neighborhoods the homes are located and identify possible renovations, etc. that will be required to create the most value possible.

“Although it's rare, you can occasionally find some great deals at foreclosure auctions. If nothing else, you'll find it educational just to attend a few, just to see how the system works.”

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