Foreclosure Auctions

Posted on August 18th, 2008 by saman

Are auctions the best places to buy foreclosures? In Florida alone, thirty six homes will be auctioned off on August 12th. There are many real estate investors that do well when it comes to getting properties at auctions. However, the process of buying a home at a foreclosure auction is not for a casual home purchaser or inexperienced real estate investor.

If you want to buy a foreclosed home, you should not try to buy a home at a foreclosure auction if you do not understand the auction process. There are some things that must be done by the purchaser, obligations you must stick too and laws that need to be followed.

For example, every state has certain laws that govern who can bid on homes at auction. If you want to bid, you have to understand certain terms of the sale. In the majority of cases, you have to put a minimum of ten percent of the bid. The bid has to be in cash or in certified funds. This payment needs to be made once your bid is approved and accepted. The remainder of the house payment will usually be due shortly after the sale has been completed. Each state has separate guidelines that you need to be familiar with if you want to buy a foreclosure home at auction.

Another thing to keep in mind is that home auctions are highly competitive and move quickly. The majority of auction only last for a few minutes and can be quite exciting. However, this forces potential home buyers to make an instant decision that could impact them for many years. A real estate investor with experience usually thrives in an environment such as this but the novice real estate investor or casual home buyer can very easily make a poor decision.

You should also keep in mind that foreclosure auctions are designed to get the most money for the property up for auction. As interest in a home is generated by the one in charge of the auction and the bidding will keep going up. This will create more interest in the home and this will raise the price even higher. It is not unusual for someone to overbid on a home and regret it later.

If you are a novice real estate investor or if you are looking for a bargain on a home, a foreclosure auction may not be for you. It may be best to enlist the help of a professional. There are a lot of real estate agents that specialize in buying foreclosures. These real estate agents can teach you about the foreclosure auction process and help you find multiple foreclosures in your area. The real estate agent may be able to find you other bargain homes that may not be going through the foreclosure process. An example of these types of houses would be pre foreclosures or short sales. Since foreclosure organizations such as banks and HUD pay the commission of the real estate agent, it does not make a lot of sense for you to hire a real estate agent. However if you have experience as a real estate investor, you can go to the real estate auction and easily find a great deal.