Planning on bidding at a foreclosure auction for the first time? Here's how you can prepare.
Foreclosure auctions — conducted on courthouse steps, in convention centers across the country and, increasingly, online — can be intimidating. The trick to avoiding foreclosure auction pitfalls is to do your homework.
Many buyers have never attended a foreclosure auction before — either a large auction in which dozens of properties from across a large geographic region will be sold, or a smaller trustee auction. If you’re entertaining the thought of buying a foreclosure, it's smart to attend a few auctions as an observer.
Some larger auctions will have representatives from several large mortgage lenders in attendance. Bidders also need to be aware that large auction firms, such as Williams & Williams and The National Auction Group, charge either a flat fee or percentage of the sale price for their services.
In some cases, you must bring a percentage of the winning bid price in the form of certified funds, the balance being due in 30 days. You’ll also find states where the entire balance is due the day of the sale.
In most regions, notices about upcoming auctions are published online or in the local paper. Zillow also posts foreclosure auction information on homes, including location, date and time. Be aware that auction dates often change or are postponed, so be sure to confirm specifics with the lender’s attorney or the trustee.
Note that the federal moratorium on evictions and foreclosures on single-family homes has been extended to June 30 — and many states have temporarily banned foreclosures — which may affect inventory in your area.
If you win this property at auction, will you live in the house? Fix it and resell it? Rent it out? Your plans for the property will affect your maximum bid price.
Remember that your bid at the auction is absolute; there is no backing out, there is no home inspection waiver. If you think basic repairs for a house will run $15,000, you don't want to end up paying $130,000 at auction if the move-in-ready home next door is listed at $140,000.
Make a set of photo and info sheets for each property — along with your top bid — just to avoid confusion on auction day.
Here are some tips for making the most of your experience:
Written by
Zillow
02.11.2018
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