| In part one, we talked about how to do preforeclosure | | | | bidding and let the property go to someone else. Don't |
| investing, which essentially means to help a | | | | get caught up in the excitement and run the price up |
| homeowner stop the foreclosure process. For a | | | | so high that it isn't a good deal. If someone else wants |
| variety of reasons, this strategy doesn't always work. | | | | to pay more, fine. You'll find another property you can |
| The homeowner may wait until it's too late, may not | | | | make money on at the price you're willing to pay. You |
| be willing to negotiate, or may not even realize this is | | | | don't lose at an auction when you don't win the bid; |
| an option. Or the lender may not be willing to work with | | | | you lose when you exceed your bid limit and eliminate |
| you on the deal. Whatever the reason, if the | | | | your profit margin. |
| foreclosure isn't stopped, a judgment is entered, and | | | | Never bid on a property without researching it first. Go |
| the property is put up for sale at auction. | | | | take a look at the property; in most cases, you will not |
| The auction will be held at the local courthouse or | | | | be able to see the interior, but at least drive by and |
| another location depending on the laws of the | | | | look closely at the outside. If the property is vacant, |
| particular state. Typically, the date, time, and place of | | | | walk around and look in the windows. Compare it with |
| the sale is published in the local legal notices. Your | | | | similar properties that have sold in the neighborhood |
| county clerk's office can provide you with the | | | | within the past six months. Do a title search to be sure |
| information you need to attend and buy at the auction. | | | | you can get a clear title; though most junior liens are |
| Foreclosure auctions usually don't attract big crowds. | | | | wiped out through the auction process, some--such as |
| Most of the time, you'll see about ten or twenty people | | | | tax liens--are not. Always assume that a foreclosure |
| watching and maybe just one or two actually bidding. | | | | property is going to be distressed and in need of repair |
| It's common for the lender to open the auction with a | | | | and allow for that when calculating your maximum bid. |
| bid in the amount being foreclosed on; that way, the | | | | If it turns out the property is in better shape than you |
| property is sure to be sold for at least what is owed | | | | anticipated, that's just more profit for you. |
| on it. If that's the only bid, the auction is over. If there | | | | Though it's common for people to abandon a house |
| are multiple bidders, the property is sold to the highest | | | | before the foreclosure auction, that's not always the |
| bidder. | | | | case. If the house is occupied, the typical procedure at |
| In most cases, you'll need cash or certified funds at an | | | | the end of the auction is for the sheriff to put a notice |
| auction, although some states allow you to bid with as | | | | on the door of the property telling the residents they |
| little as 10 percent at auction and the balance to be | | | | must vacate by whatever date state law requires |
| paid within 24 hours. If you don't have cash of your | | | | (usually seven days). Because it's possible that some |
| own, look for a funding partner to work with. | | | | people will damage the property during this period, you |
| Try before you buy | | | | may want to consider only bidding on vacant |
| It's a good idea to attend a few auctions before you're | | | | properties. |
| ready to bid just to see how they operate. Unlike other | | | | But what if the property doesn't sell at auction? |
| types of auctions, foreclosure sales are generally | | | | Ownership reverts to the lender, who is usually eager |
| low-keyed, but you might see some prospective | | | | to get rid of the property. That creates another |
| buyers get into a heated bidding war and drive up the | | | | opportunity for foreclosure investors. In part three, we'll |
| price of a property. Always set your limit before the | | | | discuss how to buy after the auction. |
| auction and if the price exceeds that amount, stop | | | | |