Question Details

Jennifer, Home Buyer in

What is involved in buying a foreclosure?

Asked by Jennifer, Fri Jul 11, 2008

This one is being advertised in the paper right now, and will auction in a few weeks. The owners still live there. Not sure when they'll be out.

Is it best to try to buy before the sale or wait and go to the auction if we really want the house? I had been told that buying at the auction meant that any other liens were wiped out, but buying before then makes you also responsible for liens, in addition to the purchase price.

A coworker also sells real estate, and she has a contract on one that is running in the public notices right now, and they will close right before the auction. So I don't want to wait and then this house already be spoken for. We've been putting in offers on houses on this road, so if we could get this one at a deal, it would be great.

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I'm not so sure that the owners are desperate to get out. This is a desirable location, and the house is very nice, but they have not had it on the market. I feel like if they really cared that they were going to be foreclosed upon, they would have had the home for sale. So it isn't on the market, but i guess we will try to talk with them and see how it goes.
0 votes Thank Flag Link Fri Jul 11, 2008
Ok, let's take this one question at a time.

First of all, if the owner is still in the home after the auction, which can happen, you will need to contact your local law enforcment authorities and proceed with a "Forced Eviction". These procedures can very from city to city so be sure to check with your local authorities and follow the guidelines set forth.

If you really want the house, try to get it before the auction. The truth is, auctions are nothing more than a roll of the dice and if you find yourself bidding against someone else who really wants the home, you will most likely pay more vs. negotiating with the seller and what they need to just get out from under it because they are desperate to get out!

As for the liens, regardeless of the method in which you buy, auction or traditional sale, you need to make sure you are buying title insurance. Title insurance gives you the right of enjoyment and therefore protects you from future liens. Truth his, auction or not, you want the seller to provide you with clear title, if they can't, then I wouldn't buy it.

As for the liens being calculated in with the purchase price, well, sure why not. If they are going to sell the home at auction, they (the sellers) need to make enough to pay off the debt including any liens. Chances are, if that is the case, the auctioner along with the seller are going to set a reserve price which means, if they don't get any bids in that amount or more, it won't sell. If you're serious about this home, you wont clear title so that means, you want to buy it at a price that allows them to clear off any and all debt.

Good luck and find a local Realtor, they can help you in determining price and how local auctions work in your area. Not to mention, the Realtor can also help in the offer process before auction.
0 votes Thank Flag Link Fri Jul 11, 2008
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