The Auction Option
Foreclosure auctions offer home buyers the opportunity to name their price. Think eBay (or Sotheby’s, if you will) for property investors! After a foreclosure home has been available on the open market for a pre-prescribed amount of time with no bidders, the property is often sold at a public auction. Such auctions are often not well publicized, so ask your real estate agent to help you find the next auction in your area for some great deals.
While most foreclosure properties sell for only 5% less than non-foreclosure homes, foreclosure real estate sold act auction typically sells for 30% to 40% less under market value. The reason auction homes are so remarkably affordable is that they are generally owned by banks and other lenders, who want to get them of their books as quickly as possible. Lenders are keenly aware that ownership is transferred in auctions as soon as the judges’ gavel hits the desk.
The initial asking price at auction is based on what is owed to the bank. Any additional funds the bank can accrue are just icing on the bank for the seller, so be sure and try to find how much is owed before you head to (or log on to) a foreclosure auction. Also be sure to check on the structural condition of the home, and find out if any repairs are recommended or required. Also, be sure to check to make sure there are no liens on the property, as all outstanding financial liabilities tied to the house will be transferred to the new owner in an auction sale.