Auctions play a very important role in the purchase of foreclosed homes or property. Thus it is vital to know as much as you can about the auction processes and guidelines. There are a multitude of tips, tricks, do’s and dont’s when in attendance at an auction. You need to understand the policies of the auction so it’s better to learn the protocol before hand.
You need to attend your first auction fully prepared. Don’t expect to be given details and information about the process or about any of the properties or houses being foreclosed. Banks move when they want to liquidate the property. Their goal is to liquidate the property as soon as possible because they have much more pressing work on hand. Banks never provide house details as some regular real estate agent would. Make sure you have all your homework done by the time you reach the auction site.
Information that you likely have to get before you reach the auction place are the tax details, location, conditions and market value of the house at auction. Get as many legal records as you can. It is possible that the owner or the tenant currently living in the house won’t allow you to enter and make a detailed inspection. However a careful observer can notice a lot of important things by just walking by or observing from a distance. Don’t forget the neighbors in this regard. They can help you a lot in your quest. And don’t be surprised if they aren’t more than willing to give you the real “dirt” on the property condition. A foreclosure property is often neglected and the neighbors might rejoice in losing the current occupants.
Another important check is to ensure that there are no liens against the property. You may be liable to pay them off under certain regulations if you win the auction. Never expect to move into the house the same or the next day if you win an auction. Transfer procedures may take up to a month or maybe more in some conditions.
Be prepared ahead of time as to how much you would be willing to pay for the home in question. Auctions proceed very quickly and usually don’t give you much time to think. Restrain yourself from bidding more than the price you have set as your budget. Auctions may proceed in such a manner that you may feel inclined to bid more and more. Avoid getting caught up in the excitement and competition and stick to your plan.
It is good to reach the auction venue ahead of time. If you intend to bid in the auction then you will likely need to deposit a pre-determined amount of money at the clerk table. This amount is refunded if you do not win the auction so you should not worry about placing a guarantee. This actually puts an impression that you are a serious bidder. You can either pay cash, or place a check if you don’t have cash at hand although those requirements vary from auction to auction.
Reaching the venue earlier may give you a chance of getting into a conversation with the representative at the auction and you may learn some useful points about the property at auction. You can also get the value for the percentage of down payment required by the winner and make sure you have the required funds available at that particular time if you win the bid.
Be mentally prepared for quick legal procedures if you win a bid and always keep the necessary documents with you. You may expect to sign a contract if you are the winner of the bid. A down payment will also be required, which under normal conditions is 10% of the bid value, and failing to do so may cancel your deposit and your bid as well. After you place the deposit, you will be given a time-line to make the complete payment. Failing to do so will make you lose your deposit as well.
Do keep in mind that it is not mandatory that the final price be the same or even near to the minimum bid given. Auctions are mostly closed at higher prices. Whatever the price even if it is higher than the minimum bid, it will still likely be lower than the market value of the property. Of course that varies from property to property as well.
Northern Great Lakes Property Management