The foreclosure process allows for three different bargain-buying opportunities: when the property is in the pre-foreclosure period, typically a short sale; at the public foreclosure real estate auction; or when the property is bank owned, also known as REO.
Here’s a quick checklist to follow if you are interested in purchasing at the public foreclosure auction (NTS, NFS).
In separate articles we also cover how to buy pre-foreclosure properties and how to buy bank owned homes.
1. Prepare your resources
Make sure that you have the resources in place to purchase the property. You’ll need to have readily available cash available because foreclosure home auctions usually require full payment in cash. Enlist the help of a buyer’s agent if you’re not comfortable attending the auction and bidding on your own.
2. Confirm property status
Call the trustee or attorney listed in the Contact Information section of the property details page on RealtyTrac to check if this auction has been canceled or postponed. Auctions can be canceled or postponed for a variety of reasons, sometimes at the last minute. If you are a RealtyTrac member, you can also sign up for Property Watch email alerts from the property details page to be alerted immediately by email if the foreclosure status, auction status or market status of the property changes.
3. Evaluate bargain/investment potential
Determine if this property represents a good bargain or investment opportunity. Start by comparing the property’s Estimated Market value to the Opening Bid (if not on the property details page, try calling the trustee or attorney to get the opening bid) at the auction or the List Price if the property is listed for sale. If either of those amounts is below the estimated value, this may represent a good bargain purchase. Also check the Sales Trends section on the RealtyTrac Stats & Trends page to search for the average discount that foreclosure buyers are getting in the surrounding zip code. That will give you an idea of the type of discount to reasonably expect on this real estate auction.
4. Attend the auction and bid
Call the trustee or attorney the day before the auction to check if it has been postponed or canceled. Bring the necessary funds required to the auction and don’t exceed your pre-determined maximum bid amount. Foreclosure auction procedures vary from state to state so it’s wise to attend a few auctions just to observe before you go to bid. Of course, if the property is listed for sale you or your buyer’s agent can contact the listing agent to submit an offer before the scheduled foreclosure auction.
5. Pay and take possession
If you submit the winning bid at the auction, the trustee or referee should provide a certificate of sale or a trustee’s deed. You’ll either have to pay the full amount of your bid on the spot or within a limited timeframe depending on the state. Once you’ve satisfied all the necessary requirements, you can take possession of the property, which may require eviction of the former owner.
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4 Steps to Buying a Bank-Owned Home
5 Steps to Buying a Pre-Foreclosure (Short Sale)