What_to_Expect_At_a_Foreclosure_Auction

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					Title:
What to Expect At a Foreclosure Auction


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Summary:
Whether you are an investor that would like to get into buying foreclosed homes for your personal use



Keywords:
foreclosures, real estate foreclosures, reo, liens, foreclosures investing, california foreclosures



Article Body:
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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