A house foreclosure auction can offer home buyers and investors greater savings than from other avenues of buying real estate.
When a bank forecloses on a home, it is losing money without the owner’s payments. Thus, it is typically very eager to sell the property to a new buyer. The bank may therefore be willing to list the home at much lower price than it would normally have, giving real estate buyers the chance to get a great deal. But before a home buyer or investor can buy a foreclosed home, they have to find one first.
Where to Find Foreclosures
The difficulty of finding foreclosures can depend on the strength of the residential real estate market. However, there are some general strategies buyers can usually rely on regardless. Reading real estate advertisements and talking to Real Estate Agents are great ways to find foreclosed homes.
Local newspapers are great places to find real estate foreclosures. Also, check government websites such as The U.S. Treasury’s site which has listings of seized properties because of unpaid taxes. Online listing services such as Zillow as well as other auction sites are also available. However, as a first step speaking to a real estate broker or agent might be best as they will be knowledgeable about the process of foreclosure auctions and can guide you through it.
Here is a list of reputable house foreclosure auction websites where you can find and bid on foreclosed homes:
- Hudson & Marshall
- Williams & Williams
- U.S. Department of Treasury
The local or county courthouse in the area can also provide a listing of foreclosures and auctions. There may be a bulletin board with the relevant information, so it can be quite easy to find. What the listings offer is a court date when the properties are going up for auction, the owners’ names, and the lender, and often the balance owed.
It is important to note that a property may never make it to the auction block if a deal is reached with the lender, or the bank will not want to auction it for a very low price.
If an investor goes to a foreclosure auction they will need to have their funding situation settled and in place. They may be required by law in their area to have 10% of the value on hand immediately after winning a bid, and may have only 10 days to provide the rest of the balance.
However, the single best way to find foreclosures might be property auctions.
Finding property auctions on the internet has made finding foreclosures even easier than in the past. Buyers can search for foreclosed properties on websites and set alerts for any new properties entering their local market.
A house foreclosure auction can streamline the process of finding a home, making it even easier for buyers than going through other channels. Property auctions often include more than 1 or 2 homes, so buyers should have some options to choose from. Not only do buyers get to see many properties at one time, they can avoid long negotiation periods and be on a level playing field with other interested buyers.
Why do Sellers Use Property Auctions?
Sellers, which are usually financial institutions, use property auctions for properties they either no longer want or cannot handle. These reasons can include:
- Properties with delinquent taxes.
- Homes with delinquent mortgage payments
- Properties that are legally obligated to be sold due to bankruptcy or divorce settlements
- Properties being sold out of probate
- REO/bank-owned properties
Not all of these properties will go to a foreclosure auction. Properties that are behind in mortgage, taxes, or other liens are most often listed for sale with a broker. County, State and Federal foreclosure sales are announced in the local law journals, but many times are not listed at all. Properties that have been foreclosed on by banks or a third-party will many times be listed in the local MLS system. However, tax foreclosure sales are risky because many times they are sold with a Quit-Claim deed and the buyer must assume the title as is. These are also limited to cash only buyers. Bank foreclosures will have a clear title and provide the buyer with a Referee’s deed.
Also, most organizations, such as banks, that have access to foreclosed properties have a huge conflict of interest when selling a home on which they foreclosed, so utilize auctions as way to sell them.
A buyer’s best bet is to find a real estate agent who has priority access to all the great deals that come up that are not necessarily going to auction. A great agent is the best place to go to get information about house foreclosure auctions, bank foreclosures and distressed sales.
Learn more about How to Buy a House Foreclosure at Auction in this article >
For more on how to find a realtor, see this article on Realtor.com.
Also, check out the U.S. Treasury’s site for listings of government foreclosures at https://www.treasury.gov/auctions/treasury/rp/