Foreclosure Auctions: How to Go Home a Winner

Attending foreclosure auctions is one of the easiest ways to own a cheap home. But it is important for you to be prepared in order to come out a winner.
| Thursday, October 13, 2011

The large inventory of cheap homes for sale has been attracting much buyer interest because of the likelihood of enjoying considerable savings. Most flock to foreclosure auctions since attending one is one of the easiest ways to own one of these foreclosed properties.

Of course, to go home from these foreclosure auctions a winner is a matter of being prepared.  It is not simply attending an auction and placing your bid. There are certain things you need to do before you even consider buying a distressed property from an auction.

Before the Auction

One of the reasons buyers and investors flock to these foreclosure auctions is the straightforward process involved. Since most auctions practice an open bidding system, all bidders have to do is to place the highest bid. For this reason, you need to make sure you have done your homework and checked the property to find out its current physical condition. Determine how much it will cost to have the property fixed up and keep the amount in mind when you finally come up with a bid amount.

Most foreclosure auctions require bidders to pay for their winning bid in cash or cashier’s check. There are trustees who agree to a down payment as long as you pay the remaining balance within a certain period. With this system, you need to look at your finances and determine if you truly can afford such purchase. It would also be a good idea to plan at the very beginning what you will do with the property such as re-sell, flip or rent it to give you a clear picture of how and when you will enjoy the profit potential of these homes.

During the Auction

Prepare yourself for the intensity of these auctions especially if you think about the other bidders who are there to grab the best deals as well. Make sure you stay focused and avoid getting caught up in the heat of the bidding. It would help if you have with you all the pertinent information you have gathered. Make sure your files are organized for easy access during the bidding.

For first time bidders, you can choose to observe the first couple of bidding to acclimate yourself. There is no need to jump into the fray if you are unsure about the property or you are not comfortable with how the bidding is going.

After the Auction

Placing the winning bid is indeed exciting. But you have to understand your work is still not over. You can head over to the trustee and ask about their terms of payment. Many take out title insurance immediately to protect themselves from adverse title claims from junior lien holders or creditors. If you were not able to check the property personally before the auction, you might want to do it at once to see if the property is still occupied. If it is, you will have to inform the occupants you are now the new owner and will be soon asking them to move out.

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