Auctions for foreclosed properties are different in each US State. However, they all provide the same opportunities for smart buyers – bargains! Foreclosure auctions are often they are held on the steps of the courthouse, within the courthouse or at the foreclosed home. For the buyer or real estate investor that has done more research, foreclosed homes can prove to be an unbelievable bargain.
There are many auctionsfacilities that have comprehensive information associated with due diligence of the property. This means that you can use their information and compare it with your researched information to see where the difference lies and to make sure you are getting a bargain or not. The more professionals you have at your disposal, the better position you will be in compared to your competition. Many foreclosed auctions attract the most prominent real estate investors who know which buttons to push to get those bargains. They also have the resources to sell the property for a quick turnaround.
You are able to inspect the property during its pre-foreclosure phase. If you haven’t done so, then you have to rely on the packet that the State auctioneers provide. There are many bargains in foreclosure properties.
The banks want to get rid of these properties to lighten their inventory. No lender wants to tie up their liquidity in property that is not making them money. So it is in their best interest to sell it, to you or other investors, often at steep discounts. The purpose of the auction is to liquidate property as soon as possible for whatever they can get at the time.
The investor has the advantage of getting a great bargain because the bank just wants to sell and is not too concerned about outstanding loan balances and mortgage payments at this point.
When you do your pre-auction research, you are able to determine what price to bid on and not to go over that set bid price. There are hard core real estate investors who will want to outbid you. If you know how much the property is worth, it will prevent you from over bidding.
Foreclosed properties are cheaper than other properties because the homeowner has already paid down the mortgage and the bank can sell the home for the balance of the mortgage amount. And there is pressure on to liquidate the property as soon as possible.
The damages on the property, if there are any, are often deducted from the price to give it an even lower amount, but you have to know what those damages are to claim the deduction, which will be reflected on the sales contract.
The property, of course, is sold “as is,” which means that it is in your best interest to know the amount of work you have to do on the property to live in it, resell it or rent it. Buying it at an auction gives you more discount because once the sales date is set by the State, they will accept the highest bid in order to sell the property on that day. If the property is not sold, it will go back to the bank’s inventory and another auction date will be set. This gives the prospective real estate investor another chance to bid on the property and get an even lower discounted price.