What To Expect At A Foreclosure Auction

What To Expect At A Foreclosure Auction



What to​ Expect At a​ Foreclosure Auction
Whether you are an​ investor that would like to​ get into buying foreclosed homes for​ your personal use or​ to​ flip the​ property or​ if​ you are having your home foreclosed on, you should know what to​ expect at​ a​ foreclosure auction .​
Of course, the​ actual steps that will be taken can vary a​ bit from state to​ state and​ from house to​ house, but it’s good to​ know what you will be getting into when you go to​ a​ foreclosure auction .​
Foreclosure auctions can be exciting, even fun, but knowing what to​ expect will help you make the​ most of​ the​ experience, whether you are an​ investor or​ a​ homeowner that is​ trying to​ get your house back.
Before the​ Auction
You’ll likely find out about the​ foreclosure auction in​ a​ local newspaper and​ on the​ flier may be information to​ pre-qualify for​ bidding .​
This will allow you to​ put down a​ deposit so that the​ auctioneer knows that you are a​ serious bidder and​ can fulfill your bid if​ you are the​ winning bidder .​
Being pre-qualified just sort of​ speeds up the​ process so that you don’t have to​ mess around with the​ deposit on the​ day of​ the​ auction .​
During this time you should also do some research on the​ house by looking into any liens that may be against the​ property, how much the​ property is​ worth, how much it​ has appreciated in​ the​ last few years, as​ well as​ property values in​ the​ area .​
If the​ home looks as​ though it​ will need some repairs, you should consider this as​ well when trying to​ come up with how much you will be willing to​ pay for​ the​ house .​
Without this research, no amount of​ knowledge about what goes on at​ a​ foreclosure option will help you because you won’t know where to​ start when it​ comes to​ actually making a​ good bid.
What Happens At the​ Auction
The auction will typically start with the​ auctioneer reading legal notices as​ well as​ a​ legal description of​ the​ property .​
The auctioneer will usually then begin taking bids on the​ property .​
If the​ auctioneer has pre-qualified bidders the​ process is​ more streamlined, if​ not, each time a​ bid is​ made the​ auctioneer will then ask for​ the​ bidders deposit check, which is​ typically right around $5,000 for​ residential auctions .​
After each bid the​ auctioneer will attempt to​ solicit bids for​ higher amounts .​
Each auction is​ different, but the​ auction increments usually are set by the​ auctioneer and​ may be by $100, $500, or​ $1,000 per bid .​
The auctioneer will continue to​ solicit bids by this increment until it​ is​ clear that the​ highest bid has been reached .​
Then, the​ auctioneer will announce, Going once, going twice, three times, sold! indicating that the​ auction is​ over and​ the​ property has been sold to​ the​ highest bidder.
Once the​ bidding has ended a​ foreclosure deed and​ purchase papers will be drawn up and​ validated by the​ new owner or​ purchaser and​ the​ mortgage holder .​
a​ grace will likely be given to​ allow the​ purchaser to​ find financing or​ to​ come up with the​ funds to​ cover the​ full amount of​ the​ bid .​
This grace period is​ usually 30 days unless the​ purchaser and​ the​ mortgage holder agree to​ other terms .​
After the​ grace period a​ closing will take place, so that the​ new owner can formally take the​ title to​ the​ property.
What Happens, Now?
The purchaser can do what he or​ she intended to​ do with the​ property, whether it​ is​ to​ move into the​ home or​ to​ sell it​ for​ full market value .​
The money paid by the​ purchaser will be distributed in​ order of​ priority, first of​ which would be taxes .​
After taxes money will be paid to​ the​ mortgage, then the​ second and​ third mortgage if​ applicable .​
If there is​ still money after paying these debts, remaining money will be paid to​ lien holders and​ creditors .​
There is​ a​ very slim chance that there will be money left over after all of​ the​ debts are paid, if​ this is​ the​ case then the​ monies will be paid to​ the​ former home owner.
What about the​ Original Owner?
The original owner will often be at​ the​ auction so that they can bid on their home, and​ this is​ legal as​ long as​ they have the​ deposit required .​
If the​ owner of​ the​ home that has been foreclosed does bid on the​ home they must remember that the​ deposit is​ not refundable and​ the​ deposit assumes that they will be able to​ finance the​ home within the​ grace period .​
Owners must also remember that if​ they buy the​ property back old debts may merge and​ become reinstated such as​ second and​ third mortgages that became void when the​ first mortgage foreclosed on the​ property unless one has filed bankruptcy and​ is​ truly free and​ clear of​ these debts .​
Owners will often drum up the​ funds to​ make the​ deposit so that they can have another 30 days to​ try to​ save their home .​
Owners may or​ may not be successful in​ their attempts to​ save their home at​ a​ foreclosure auction.
As you can see, there are a​ lot of​ things that go into a​ foreclosure auction, but none of​ them are all that difficult to​ understand, but knowing about them makes the​ auction more enjoyable .​
The auction itself is​ not all that complicated, but it​ can be very fast paced .​
At some foreclosure auctions there are a​ lot of​ people, at​ others there are only a​ few because of​ the​ location or​ just the​ debts attached to​ the​ property, or​ even the​ state of​ the​ property .​
If you are serious about the​ property you should pay close attention when bidding starts so that you are sure that you can get your bid in​ when you feel it’s time so that you have the​ best chance of​ being the​ top bidder.




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