Foreclosure Auctions
The second way to buy foreclosure properties is at a foreclosure auction, traditionally held on the courthouse steps (although most courthouses have brought that function indoors). Auctions are advertised in the legal notices of the newspaper, and your county clerk's office can provide you with the information you need to know to attend and buy at the auction. It's a good idea to attend an auction to see what goes on before you go to buy; Chapter 7 tells you more about auctions in general. Foreclosure auctions usually don't attract big crowds; you'll generally see 10 or 20 people watching with maybe only 1 or 2 actually bidding on property. Bobby Threlkeld routinely buys at courthouse auctions and says that's how he gets great deals on properties when the owner didn't have sufficient equity to make a preforeclosure deal work.
In most cases, you'll need cash or certified funds at an auction, although some states allow you to bid with as little as 10 percent at auction and the balance to be paid within 24 hours.
If you want to bid on a property, research it beforehand. Drive by the property. If it's vacant, inspect the house as best you can by walking around and looking in the windows. Compare it with similar properties that have sold in the neighborhood within the past six months. Do a title search; in most states, secondary mortgages are wiped out at the auction, but you still want to be sure you can get a clear title.
When the auction is finished, the typical procedure is for the sheriff to tack a notice on the door of the property telling the residents they must vacate by whatever date state law requires, usually seven days. Do people trash the house during this final period? Sometimes. That's why I recommend bidding only on vacant houses if you're buying at auction.
Bright Idea
When you're showing a house, whether to sell or to rent, have a sign-in sheet near the front door so you can collect the names, addresses, phone numbers, and e-mail addresses of everyone who looks at the property. Build a database with this information, so you can let these people know when you have other properties on the market.
Continue reading here: How Much Should You Bid and Where Do You Get the Money
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