Before you race to a foreclosure auction to swoop up a good deal there are some basics you need to learn. You want to win, but that win can turn into a nightmare, if you don’t think it through ahead of time.
1. Know Where to Find Foreclosures – Take advantage of all available outlets to help you find a foreclosure that will meet your needs. You can obtain a list of properties that have defaulted mortgages from lenders, and newspapers and courthouses generally post upcoming auctions. You can also find a list of properties at the U.S. Department of Housing and Urban Development.
2. Check Out the Property – You won’t be able to get inside the property, but you can certainly drive by, look at the exterior, and make sure the neighborhood is what you are looking for. If you are lucky you can peek through a window to see the condition inside, but these homes are usually closed up pretty good, so you can’t see inside.
3. Be a Silent Observer – Go to a couple auctions of houses you have no interest in just to get comfortable with the process. You will feel a lot more confident going into your actual auction, if you know what to expect.
4. Do a Little Homework – Price the property you are interested in ahead of time. You can look at live listings of similar homes in that area or talk to a real estate agent. Keep in mind that the home you are interested in could need a lot of work done, so it might not be worth nearly as much as other homes in its current condition.
5. Preregister – Some auctions require you to be preregistered ahead of time. Make sure you are, or you won’t be able to bid. This is also a good time to contact the official to ask what percentage you will need to pay upon winning.
6. Bid Thoughtfully – Some recommend waiting to bid until close to the end. If you are bidding against two other people, three of you will increase the bid faster than two will. Know your maximum bid and don’t exceed it. It’s easy to get swept away by the excitement, and then end up with buyer’s remorse.
Don’t let the fear of the unknown keep you from buying your dream home at an foreclosure auction. Everyone is a “newbie” bidder at some time. It can be a little intimidating, but if you do your homework and you are prepared the process can be really rewarding.