It is true that property investors are little bit daunted to bit a good amount in a property auction as auctions are an exciting yet emotional event. Even though you may have had the habit of bidding at thousands of auctions, you can never deny the adrenaline rush every time you attend a bidding auction event. From taking on the huge competition to the extreme heartbreak of falling in love with a certain property which is later on outbid by someone else who has deeper pockets.
Trustee sales usually offer the buyers to get a chance to buy a foreclosed home with a discount. But before you take the plunge in buying a home, make sure you are aware of the key points and also the possible pitfalls of buying auction homes from such events. Let’s take a look at few such things that you should be aware of.
#1: Know how foreclosed homes land up in auctions
If you’ve heard about trustee sales, you would know that they are publicly-held auctions where the buyers can easily bid on properties. Whenever a homeowner defaults on his mortgage for more than 60 days, a trustee sale takes place. The owner is initially sent may ‘notice of default’ and when the owner fails to produce the delinquent payment, the lender seizes the property to recuperate the loan balance. A trustee is appointed who is handed over the responsibility of selling off the property at an auction.
#2: You have to get pre-approved for a loan to buy a foreclosed auction home
In order to seek benefits of trustee sales, buyers need to first get pre-approved for a home loan even before the auction is scheduled. The lender will then check your assets, income, credit history and debt before approving you the loan amount. Once he does this, you will get an approval letter stating that your home loan has been approved for a fixed time period. Only by carrying this letter in your hand, you can decide to buy an auction home.
#3: Carry cash while you go to buy the foreclosed home
When you reach the auction, the trustee will set the bid at some price and decide a minimum bid amount for each property. The price that he decides will include the fees of the associate lawyer, the loan balance and other costs connected with foreclosure. Hence, bidders have to come prepared with cash or a check in case the bid is soon accepted.
#4: Do your bit of homework
If you seem to be intrigued by the idea of buying a home after a trustee sale, take enough time to evaluate the auction home list and find out the number of minimum bids. You can also research the home and when you have more time in your hand, drive by to inspect the property and the surroundings. Though you won’t be able to enter, this step can help you provide insights.
So, now that you’re ready to buy an auction home, get ready by taking the above mentioned advices into consideration and help yourself choose the best property.