With more homeowners facing foreclosure, more homebuyers are taking a hard look at foreclosure auctions, government auctions, online auctions, bank-owned auctions, REO short sales and other forms of auctions for distressed properties.
Find below-market priced properties
But cashing in on the growing wave of foreclosure auctions requires you to do some homework and spend some time researching repo homes. And foreclosure investors should not venture into foreclosure auctions without competent assistance, including an experienced real estate agent, a real estate attorney, a knowledgeable investor or real estate mentor, and other professionals familiar with local real estate laws. Investors and homebuyers need to know a little bit about every aspect of foreclosure auctions, including contracts, financing, negotiating, acquiring, rehabbing and later selling these properties.
Buying repossessed homes requires substantial work and is fraught with risks. For example, you can spend a lot of time and money doing research and homework on a seized home only to find out it sold to another homebuyer or investor. Moreover, banks aren’t in the business of holding and selling homes, and don’t expect to land an REO for a song. Frequently, banks are trying to get top dollar for their bank-owned auctions.
Bank-owned foreclosure auctions are usually sold “as is,” which means that the discount you just saved on the purchase price can easily be wiped out by unforeseen expenses such as major structural repairs not apparent without a detailed interior inspection. People who lost their homes to lenders very likely couldn’t afford to maintain their property. So auction bidders should be prepared to pay for any problems such as vandalism, structural repairs, electrical and plumbing repairs as well as damage inflicted to the home by angry homeowners who “trash” their home by punching holes in the walls and doors, pouring cement down the drains and stealing appliances, light fixtures, doors, toilets and cabinets.
Buying foreclosures at auction isn’t for the meek and uninformed. If you are bidding at a foreclosure auction make sure what you’re buying is a deal and not years of litigation and heartache.