Courthouse vs. Online Foreclosure Auctions [The Differences]

So you are looking to purchase a property at a foreclosure auction but are not sure whether to go to a courthouse auction or take part in an online auction. We discuss the differences between courthouse foreclosure auctions vs. online foreclosure auctions in this article.

Online Foreclosure Auctions

Most online auctions do the same thing and are used in the same way. Just setup a free account with a username and password. Input data in the fields for rooms and zip codes. Try and see if you can get inside the property to check on the rehab level.

Also, make sure to find out when the auction date and time is. Would be bidders can set up alerts for when new properties become available. Each type of transaction has different terms and conditions, so make sure to read up on these.

Many online foreclosure sites act like wholesale channels where the buyer can avoid many of the transaction costs. This will in a way make the bidder a wholesale buyer than a retail buyer of real estate. Buyers also do not need to use a broker or real estate agent with online auctions.

Make sure to do your due diligence before the auction as each property has different terms and conditions. If you’re new, it can help to hire a realtor assist you with an online auction. When doing appraisals, surveys, inspections and title searches, make sure to use qualified experts to help you unless you are confident you can do a thorough job. These include a licensed appraisal person, a good licensed contractor, and a certified title examiner.

Benefits of Online Foreclosure Auctions

Using an online auction site can be very profitable, as just saving 10% on the purchase can equal $30,000-40,000 saved. This will put the investor well ahead of the game financially.

Avoiding Mistakes at Online Foreclosure Auctions

Making mistakes in the online auction buying process can cost many thousands of dollars. Trying to do things yourself when you should hire an experienced professional can lead to lost profit. Paying one to two thousand dollars to get all the additional work done by outside help still means you are ahead of the game.

Estimate the Rehab Budget

Make sure to check if property is on the MLS or a popular site like Zillow — these will often have interior images that are fairly recent. This gives you a good idea of the condition (assuming no vandalism or major catastrophe).

The reason seeing the home in photos is essential is to judge the necessary rehab budget. It is a bad idea to bid on a property without any knowledge of the necessary repairs, which can be very expensive.

Paying for an Online Foreclosure Auction Property

To take part in the auction, most online auction sites have a 10% downpayment requirement. If needed, have a private lender ready for the down payment. The rest you can get over the next 30-40 days with financing. Remember, cash is king, so be prepared to have it ready.

There may be issues with getting the deed to close on the sale and financing. This may affect your ability to finance the property.

As with all auctions, you must be able to determine the maximum offer price you can offer beforehand as to eliminate the risk of overbidding.

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Courthouse Foreclosure Auctions

Most foreclosure auctions take place at the county courthouse. However, they can also be held at convention centers, community centers, or even at the property itself.

These auctions are usually conducted by a county official, trustee, or sheriff, depending on the state and county.

Any winning bids must generally be paid for on the day of a courthouse auction with cash or cashier’s checks.

Each state has their own laws so different courthouses will conduct the auction following their own schedules and rules. This will require each bidder to do some research beforehand to understand the specific processes for the county holding the auction.

Advertising for Courthouse Foreclosure Auctions

Courthouse foreclosure auctions are generally advertised to the public at least 3 weeks before they happen. These can be found in local newspapers and will include details about the property. Details include their address, parcel number and the minimum starting bid amount.

Information about the auction will likely be displayed at the courthouse in a conspicuous place.

Finally, a notice of sale may be posted on the the property itself.

How to Register for a Courthouse Foreclosure Auction

Bidders need to register with the auctioneer or the county courthouse’s website before the auction begins.

To register as a bidder, you must provide proof of ability to pay. You must prove you have either the minimum bid or the full purchase price on the property or properties you’re interested in. How much depends on the auction location. This is a condition of getting a bid card with your number on it. So be prepared to display full payment right then and there in cash or cashiers checks.

Differences Between Online and Courthouse Foreclosure Auctions

One major difference is buyers at a courthouse foreclosure auction must physically attend the auction. Online auctions are entirely remote.

Courthouse auctions have much more clear (and shorter) time frames for completing the sale for a winning bidder. Online auctions generally have a longer 15-30 day period for completing the sale.

Online auctions can have different timelines for the auctions they offer. An online auction can often last more than one day, similar to eBay auctions.

Finally, many online auctions allow financing of properties. You can submit a minimum deposit and evidence of pre-approval for a loan, and be able to bid on properties.

Online vs. Courthouse Foreclosure Auctions a Nutshell

Online and courthouse auctions can be great places to get real estate at bargain prices. Keep in mind the differences between online foreclosure auctions vs. courthouse foreclosure auctions, and you will be on the right track.

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