 |
|
There have been a record number of home foreclosures in the United States in the last year, with the result that a new trend has started: Foreclosed Home Auctions. In some instances, several properties are offered for sale on auction day, with prices often tens of thousands less than the market price of each home.
Foreclosure occurs when a homeowner or property owner has defaulted on the repayments on the mortgage or home loan. The bank or financial institution, which lent the mortgage money, has the right under law to recover their investment through the sale of that property. The property is put up for auction, and the mortgage holder sells the rights, title, and interest to the highest bidder. Sometimes, homes are foreclosed on when the owner has not paid property taxes, and you can access information on these through the municipality.
Foreclosed home auctions are done through an auctioneer who will advertise the property for sale, as well as post the necessary legal notices of foreclosure sale by auction. Foreclosed home auctions are usually advertised widely on the Internet at sites like http://www.ushomeauction.com/index.php and http://www.foreclosurelistings.com/foreclosed_home.php and through local newspapers, property magazines, and similar sources. An Internet search with Foreclosed Home Auctions and your target area will usually produce information about upcoming auctions. These auctions are a matter of public record.
So, when you have found the property you’d like to buy, how do you go about entering a bid? The following advice will help you:
It's a good idea to familiarize yourself with the auction and property laws in your state – you don’t have to be a legal expert, but know your rights and the legalities of the sale of foreclosed homes. This site lets you ask questions on legal issues: http://www.expertlaw.com/forums/showthread.php?t=27987 but remember, this isn’t a substitute for consulting your own lawyer!
Try to drive by the property to get some idea of what it is like, the maintenance, and the kind of area it is in; also find out what the probable market value of the home is, how much is owed, and if there are unpaid taxes or liens against the property. Much of this information should be available from the auctioneer, municipal offices, land registry, etc. Bear in mind you may not have the opportunity to actually enter the property before the auction.
Make sure you will be able to access the necessary financing if your bid is successful. Decide the maximum you are willing to pay, work out the down payment you will need, and make sure you are pre-qualified for a mortgage if you will need one. You might need to talk to your bank or financial institution. Most auction houses require clients to lodge a bank draft or certified check of the deposit amount with the auctioneer at the start of the auction to qualify as a bidder. A phone call to the auctioneer's office will get you the information about how you become a qualified bidder – in some states, it is a legal requirement that the full amount of the winning bid is paid to the auctioneer at the end of the auction.
If you're not familiar with the auction process, or have never taken part in a Foreclosed Home auction before, go along to at least one and observe the procedures, so you will be familiar with what is happening on the day you attend the auction in which you intend to bid on a foreclosed home.
You must be aware that, if you are the winning bidder at a foreclosed home auction, you will have to assume responsibility for any liens against the property that take priority over the mortgage.
It is also important to remember that buying at a foreclosed home auction is a situation of “caveat emptor,” or “buyer beware.” The property is sold with no warranties and no title insurance, and bidders may well not have had the opportunity to closely examine the property before the auction.
At the auction, the auctioneer will check that the deposit checks are in order and keep a list of the names and addresses of the bidders. A legal notice will be read out stating the names of the people/institutions involved in the foreclosure proceeding, the legal description of the property, and the terms of the sale. You will have an opportunity to ask questions, and then the opening bid is called. This bid is usually based on the total amount owed on the mortgage, and may also include interest, late penalties, and liens, as well as other costs the lender has incurred during the foreclosure procedure.
If there are no bids higher than the opening bid, the property reverts to the lender who is foreclosing.
You're the highest bidder? Congratulations! You will be asked to endorse the deposit check (the bank draft, certified check, etc., that you lodged with the auction house) and then sign a purchase and sale agreement. The terms of this agreement were read out when the auctioneer started the auction.
It is probably wise to have your own lawyer read over this document, and you may need to start eviction proceedings if there are tenants in the property and you don’t want to continue with the rental arrangement.
You can read more articles about purchased property at foreclosed home auctions on this website: http://ezinearticles.com/?Getting-The-Best-Home-For-Your-Money-From-Foreclosed-Property-Auction&id=437324
|
