| A foreclosure is a legal proceeding in which a bank or | | | | andfigure it into your bidding price. The bottom line is |
| lender sells or repossesses a property dueto the | | | | that is you should beaware of what I've mentioned |
| owner's inability to comply with the mortgage or deed | | | | above, but these same characteristics of aforeclosure |
| of trust paymentschedule. Banks and other lenders | | | | auction are what keep many reserved or timid bidders |
| usually consider a mortgage to be indefault when | | | | away, andtherefore allow you to bid on the property |
| payments have not been made for several months. | | | | with less completion. |
| Nowdespite being a dreaded word, a foreclosure can | | | | If you decide to attend this type of auction you're |
| actually be extremely lucrativefor those looking to | | | | probably curious as to wherethey're held. Foreclosure |
| invest in distressed real estate. Now that you havean | | | | auctions are typically held at the property'slocal |
| idea of what a foreclosure is, I will go on explain the | | | | courthouse or at the property itself (although this is |
| portion of theforeclosure process known as the | | | | rare.) Ifyou've never been to an auction, when a |
| foreclosure auction. | | | | property goes up for foreclosureauction, the |
| Often the owner will try to sell his/her property before | | | | competition can initially seem even be intimidating. Don't |
| the foreclosureauction. However, if the owner is unable | | | | let thisdiscourage you because purchasing real estate |
| to sell the property before theauction takes place, the | | | | this way is ultimately verylucrative, and that's why |
| trustee will auction the house off to the highestbidder. | | | | investors and others do it. If you'reinterested in |
| At this time, the bank/lender often pays any | | | | attending a foreclosure auction I recommend you |
| outstanding debtssuch as property taxes or amounts | | | | consider thefollowing: |
| owed to the IRS in order to sell the housewith a clear | | | | Research the condition of the foreclosed property and |
| title. | | | | any existing debts such as liens, unpaid taxes and |
| Buying property from a foreclosure auction is an | | | | previous construction debts |
| experience unlike any other in purchasing real estate. | | | | Scope out land use problems such as zoning or toxic |
| Although it can sometimes seem to be a risky venture, | | | | waste issues |
| it can often also very lucrative. So Irecommend that, | | | | Find out the auction rules and how the auction process |
| while you try to participate in foreclosure auctions, | | | | works |
| first-timeinvestors tread carefully. This is because | | | | Sit in (without bidding) on some foreclosure or other |
| many times a potential buyermight not even be | | | | auctions ahead of time |
| allowed to inspect the property prior to the auction and | | | | Do all the calculations, decide what your maximum |
| inaddition will likely have to find nontraditional financing | | | | offer will be, and make sure not to go above it |
| to come up with theentire purchase price in cash over | | | | Arrange for any financing you may need ahead of |
| a short period of time. Although this is veryrare, buying | | | | time with short term lender with a view towards |
| at a foreclosure auction sometimes also comes with | | | | flipping or refinancing later. |
| at least thetheoretical the possibility that the former | | | | If you or someone you knowif looking to attend a |
| owner will exercise his/her rightof redemption by | | | | foreclosure auction there are many websites out |
| coming up with the cash to buy the house back within | | | | therethat specialize in providing that information. One |
| acertain allocated period of time after the foreclosure | | | | such website thatreally stuck out from all the others |
| sale. (Although manyjurisdictions do not have right of | | | | was GovernmentAuctions.org. Wewere blown away |
| redemption provisions.) Anotherwarning is that IRS also | | | | by just how foreclosure auction information they had |
| has 120 days to redeem the property if back taxes | | | | withintheir online database, and how up to date it was. |
| areowed. But this rarely happens, and if back taxes | | | | The great thing about theirwebsite is that you can |
| are indeed owned, and the bankhas not taken care of | | | | browse auction listings from all 50 states and find |
| this prior to auction, you can always calculate it | | | | theauctions closest to you. |