All Posts Tagged With: "foreclosure"

Thought I would address this topic as the question comes up quite often. The general public is extremely curious about this topic. An auction if executed correctly and ethically is the best way to buy and sell a home in any market. Moreover, the auction method of sale is not only for foreclosures and distressed situations. This is important to know because auctions styles and protocols for consumers are very different depending on the homes circumstances. So as a buyer you need to be aware of what type of auction you are participating in.

Just because you see the word “auction” does not mean it is a foreclosure. I need to stress that. And as a matter of fact, buying a home on the court steps during an auction is extremely difficult.

Nonetheless, if you show up to buy a home on the court steps during a foreclosure auction you had better be prepared. Depending on the state the property is located and what is owed on the home, you had better do your due diligence or you may be purchasing a home while at the same time inheriting mortgage debt that puts you upside down right out of the gate. If the property is worth buying, then small and large investors will be bidding with all cash offers because they know the ROI on that property can be realized. So if you are the only person bidding, STOP!!! You may not have analyzed the property circumstance very well.

Make sure to read the terms and conditions clearly. Some auctions may require all cash bids or pending bank approvals. Some court auctions do not allow for bank financing. So for a traditional buyer you are stuck. Save yourself the anguish and clearly read the terms and conditions. The banks may not make it is easy to purchase a property because they would rather have the asset revert back to them so they can sell it traditionally with a Realtor as a bank owned home.

The last item I want to discuss is “pending bank approval.” I absolutely despise this. This is not an auction even though it is being marketed as an auction. You see the ads on TV. “5000 PROPERTIES BEING AUCTIONED” at some fancy hotel.. Read the terms and conditions. WHEN THE HAMMER FALLS THESE PROPERTIES ARE NOT REALLY SOLD. Some asset manager at a bank has to approve it and in nearly all cases they counter back with a higher number. Remember they have a cash deposit to hold you to the fire. Hopefully as auctions gain in popularity as they are now, state regulators will clean this up. It really gives the word “auction” a bad name.

Look for my next article as I discuss non-foreclosure auctions for buyers and sellers. This presents a wonderful situation for buyers and sellers. It is also gaining in popularity over using the traditional real estate agent. Is this sales plan right for you?