If you’ve ever seen any of those property investment shows on TV you may have asked yourself just how you get started. Or maybe you’re looking for a bargain just for yourself, or for the family. You should consider buying a property at auction. There are plenty of choices out there. Realty Tech, in 2018, indicated that there were 570,899 foreclosures in various states of processing. A foreclosure happens when a borrower defaults on a loan, and the lender chooses to appoint a trustee or obtains a court order, to sell the property to recover the balance of the debt. Such auctions take place to live, usually at the county courthouse or other large venue, or online. Online auctions have become more popular as people become more comfortable making large purchases online but most are still conducted live. The auction process can be complicated, and you will have to navigate through long contracts, escrows, disclosure documents, and reams of paperwork.
There are a number of steps to be taken to participate in a live foreclosure auction:
- Find and track foreclosure online. You will find RealtyTrac and Auction.com very helpful in doing this.
- When you find a property that interests you, do some research. Find out how much is owed to the lender, and what the actual value of the property is.
- Make a drive-by inspection of the property if possible. Most of these homes will be occupied by the current owner or a renter, so do not bother them or trespass. This is a criminal offense.
- Get your financing in order. Winning bidders are required to pay in full at the time of the auction. Some auctions even require a refundable deposit of 5 to 10% of the https://www.auction.com/ selling price before you are allowed to bid. Some states will allow a short delay in payment, but this varies.
- Confirm the auction, even on the actual date on which it is to take place. It is not unusual for such auctions to be postponed or even canceled. The lender may grant the debt additional time to allow for a short sale, or the debtor may have reached a modified agreement with the lender. Check before you show up to avoid wasting time.
- Arrive at the auction site at least one hour before bidding starts. Obtain a Bidder Card, which you will raise in order to register your bid.
- If you win, prepare for quite a bit of paperwork. The payment will be due immediately. Then you must complete a certification of sale, or execution of sale receipt, a deed upon sale, and an IRS Form 8300 (used to report cash payments over $10,000), and/or any documents required by state law.
- Wait for the Certificate of Title to arrive, which takes as long as ten days to process.
When all is said and done, buying a property at auction may be the best way to go when you are looking for a bargain. Just make sure you are familiar with all the requirements and procedures to make the process as painless as possible. Buying at auction eliminates any bargaining procedures, but it may require quite a bit of thinking on your feet. And stick to your budget. Don’t get carried away in the excitement of the moment.