Foreclosure in 55337>Question Details

Richie, Home Buyer in Apple Valley, CA

How to buy auction property? Pls adv

Asked by Richie, Apple Valley, CA Fri Nov 16, 2007

Does it require a lot of cash?

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Answers

7
Jim Walker’s answer
There are several companies that operate post foreclosure auctions.
There are several important differences between Forreclousre and POST - Foreclosure auctions

Foreclosure Auctions are held on the county courthouse steps.
The owner the second before the auction is complete is the debtor, the family that is about to lose their house. If no one bids in cash, the amount owed to the bank, then the auctioneer transfers the ownership to the bank. Thes courthousesteps sales usually require all cash.

A POST Foreclosure auction happens later. After the bank has owned the house a while, they decide that the lawn is now dead enough that they can sell the house.
They hire auctioneers to sell the house at auctionalong with dozens or other foreclosed properties. These auctions are done at County fairgrounds, convention centers and hotel ballrooms.
They have loan officers at the auction. Or you can have a loan preapproved by your own lender. People buying as owner occupants can buy with as little as 5% down. Investors must payer a higher percent down.

There are many pages of details. You can have a Realtor represent you at one of the POST Foreclosure auctions. The auctioneer will pay the Realtors Fee, and charge you the same as if you had NO Realtor.
2 votes Thank Flag Link Fri Nov 16, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Richie,
Most auction properties or on our local MLS. They list the auction properties at $1.00. There might be a reserve which means a minimum price the seller will accept. If you win the auction you have to give them a cashier check right then to hold the property. You pay the rest at closing. They will not take a contingent offer; you might even have to do the inspections before hand. There is a national bank that is auctioning off some of their foreclosed inventory in the area, they require a cashier’s check for $5,000 at time of auction and you have to close within thirty days. You can have a Realtor advise you if the home is on MLS if it isn't you might have to deal directly with the auction house.
Michael
1 vote Thank Flag Link Fri Nov 16, 2007
Most auction properties are really left best to professional investors. They often come with limited review of the property, no permitted contingencies for inspection, financing, etc, and can have many unknown defects. Oftentimes it is better to seek owner-occupied sellers or homes sold by banks after foreclosure as they permit contingencies and many times are actually better deals.

Keep in mind that homes are priced cheap for a reason. If they really were a "steal" there would be more demand for them.
Web Reference: http://www.AaronSOLD.com
0 votes Thank Flag Link Wed Nov 21, 2007
Richie,
If you are thinking of sheriffs auctions for homes going into foreclosure that's another issue. What you are really buying is the right to the home after the six month redemption period. Typically the first lien holder is the only bidder at the auction; they want to protect their position. You better off looking for homes being sold during the redemption period which usually show up as "short sales" or waiting until the bank takes title and advertises the home for sale. Most of those are listed on MLS.
Michael Doyle
0 votes Thank Flag Link Sat Nov 17, 2007
Thanks a lot everyone. I really appreciated your adv.
0 votes Thank Flag Link Fri Nov 16, 2007
Jim's answer was exceptional. I'm sure he didn't add the following, which I have heard him say before, because he knew someone else would bring it up. So I will take the baton and ask, why are you looking to buy an auction property? Do you think you are going to get a better deal?

Today, foreclosures are ramped because the homeowners owe more than the home is worth. In the past, foreclosures might have been a good deal because people had to put 20% down on the house. Then job loss or medical problems caused them to no longer afford the payment. Someone buying the house at auction could get a 10 to 20% discount on the price. But today, the bank is looking to get their money back and could be selling it for more than market value.

You are much better off looking for homes where the seller has equity in the house and just hasn't sold. The seller is willing to sell below market value to move on. Developers or investors who have deep pockets are offering deep discounts to get rid of their inventory. These traditionally MLS listed homes are much better deals and you are able to do inspections, get warranties, and take your time making a rational decision.

Good luck. I now pass the baton to the next person who will tell you about supply and demand and the frenzy for auctions.

Ruth
0 votes Thank Flag Link Fri Nov 16, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Depending on the type of auction and the seller, you may not need any money down or you might have to purchase to entire property with cash after the auction. You should either contact the auctioneer or carefully read their flyers to see the terms upon successful bid at auction. Most auction companies have a disclaimer at the bottom of their advertisements laying out the specific details for completing the transaction after the auction is over.
0 votes Thank Flag Link Fri Nov 16, 2007
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