Foreclosure or aution houses are flooding the market. Aren’t they cheaper in general? what are some of the pros and cons of buying these houses verses those that are on the market? How is the transaction differ than other purchases?
What are the advantages of buying foreclosure or auction houses?
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Public Auctions or Sheriff’s Auctions are not for the novice real estate investor. Generally they are the most risky time to purchase foreclosed property. This is not to say that they can’t be an overwhelming profit center. There is no doubt that auctions can yield major returns.
What happens at an auction is generally very similar in all states. Some states will auction the property in a courtroom and others will literally auction the property on the courthouse steps.
At an auction there will typically be a referee who handles the bidding. Most likely there will be a representative from the bank that is foreclosing, and there will be some investors present, and others just interested in what is happening.
The bidding at an auction will start at whatever is owed to the bank, plus legal fees. Like preforeclosures, auctions are a good time to buy property at below market value. Buying below market value will give you equity. I have seen properties sell for half price at auctions!
You can find great deals at auctions, but there are also many pitfalls, particularly for novice investors. One major obstacle with auctions is you generally need to pay cash, on the spot, for the property. This alone eliminates 95% of people from buying at auction.
Another drawback to auctions is that the homeowner is given a redemption period. Typically, the redemption period is six to twelve months. From the time the house sells at auction, the homeowner has the right to buy it back for what it sold for plus interest. This means you could buy a house at auction and might have to sell it back to the original owner during the redemption period. Additionally, if the homeowner does not move out at the end of the redemption period, it becomes your responsibility to remove the tenant through the eviction process.
Public auctions are very easy to find. Just call your local county assessor’s office and ask whom you need to speak to regarding sheriff’s auctions.
Investing in real estate is getting tricky in this down market. Im a small real estate invester and in my experiance, homes sent to an auction house are there for a reason (no one wants it). Forclosures are on the market most are listed in the MLS. you can also get a home before it goes to forclosure it is called a short sale. you can find all this info and more including links to all the major forclosure sites (for free) at …..
steves guide to real estate investing….
use dashes between each word
Foreclosure purpose is to try to sell the home quickly.
And when homeowners can no longer pay for the payments of their home it can be taken back by the original finance or mortgage company.