Offering the possibility of real estate bargains, buying a foreclosed home is a popular option with many aspiring homebuyers. The first step of foreclosure simply sees the bank or lender informing the homeowner about the financial situation, and advising them to make the required payments. However, if this demand isn’t met, the homeowner is issued a Notice of Sale, and the foreclosure process moves on to the next step – the foreclosure auction.
Foreclosure auctions are the most popular type of foreclosure sales, but they can be a bit bewildering, especially if you are attending your first one. The bidding process can often get very aggressive, and sales happen very fast, confusing even the most experienced of homebuyers at times. However, the key to successfully buying a foreclosed home at an auction is prior knowledge and preparation.
- Begin by searching for foreclosures in your province or city. Look for advertisements that refer to “bank owned” homes, or any notice of a foreclosure auction. In addition, it is also prudent to apply and get preapproved for a mortgage before you attend the auction – having your finances sorted will probably increase your chances of being able to make a sale.
- Satisfy yourself in regards to the value and price of the home. Here, it is important to look through multiple foreclosure listings, so you can compare prices, and see how much homes of this sort are going for in the current market. This is especially important if you are buying the house in order to flip it (i.e. resell it for a profit).
- Once you find a foreclosed home you are interested in, do a little investigating prior to the auction. Pay a visit to the home with a professional home inspector, and conduct a title search. Take into account any liens, and any repairs that might be needed on the house before the auction, so you know what you are bidding for, and can judge the price accordingly.
- Before the auction, prepare yourself for the bidding process. Make sure you are clear on what your maximum bid will be (don’t get caught up in any bidding wars and bid more than you can afford). Inquire beforehand about whether down payment is required to close the bid, and if there are any fees that the winning bidder needs to pay.
- Foreclosure auctions frequently get delayed with little to no warning, so it is best to call the seller mentioned in the listing a day before, to confirm whether the auction is taking place.
- Finally, make sure you take along all necessary documents when you go to the auction. When you arrive, check in with an official at the auction, and ask him/her any questions you might have before the auction begins.