Considering a Raleigh foreclosure auction?Â It's not a one-size-fits-all world.Â Are they a good deal for you?Â It depends â€“ caution required.Â Let's find out.
Michael wanted to buy his first home at a Raleigh foreclosure auction.Â He'd heard of the super good deals available.Â This was his chance to get his.Â Tama, his wife, had just found out she was pregnant and wasn't so sure.
Ronnie was a real estate investor Michael knew.Â Ronnie had purchased homes at foreclosure auctions.Â He was willing to sit down with Michael and go over the process.Â It's a unique home buying experience.Â It's not like buying a house from your typical seller.Â Ronnie outlined the process:
Â· After taking over the property, this was the lender's first chance to sell the house.
Â· Auctions are a legal process with strict rules.Â Rules differ from the normal sales driven process.
Â· Process does not include opportunity for inspection of property.Â Property sold "as is."
Â· The auctions occur on the courthouse steps.Â Buyers bid on the property.Â You're standing shoulder-to-shoulder with your competition.
Â· High bidder required to make 10% deposit on the spot.Â Cash, money order or cashier's check is accepted.Â Not personal checks.Â Rules apply to the 90% due once bid is accepted.
Â· There is an upset bid period after the auction.
Michael had not known about needing cash.Â He didn't have that kind of money lying around.Â He had planned on getting a mortgage.Â Ronnie pointed out that banks sometimes provide a line of credit buyers can draw from to meet the rules.Â Other factors to consider â€“ some pros and some cons:
Â· Not all auction sales are good deals.Â Lenders set minimum bids to cover money owed to them on the property plus costs related to foreclosure.
Â· There is no real estate agent commission.
Â· Concern exists over condition of home.Â At minimum you must assume money has not been available to do maintenance.Â At worst home owner may trash home in frustration or vandals may strip home of copper pipes and wiring.
Â· Inspection period not provided.Â Some bidders visit property, look in windows, etc. to protect themselves somewhat.
Â· You'll be competing against seasoned investors.
Ronnie bought homes at auction.Â He couldn't recommend foreclosure auctions to a first-time buyer like Michael.Â Tama was relieved.Â She wants a home she can move into, do minor decorative changes and set up a nursery.Â Where do you fit in?Â What do you want?
Kathy Godin, Award-Winning Loan Officer and Branch Manager
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