Foreclosure Auction Faq

By: John Montgomery

Q: Who can participate in a foreclosure auction?
A: Unless otherwise specified by the seller, anyone can participate in a foreclosure auction. Some organizations, such as HUD, give priority to owner-occupant bidders before allowing investors to participate. For additional information on an upcoming foreclosure auction, check with the lender who currently owns the property or the auction house conducting the sale.

Q: When should I have an inspection completed?
A: The answer to this question will differ depending on who you ask, but the one consistent statement is that inspections are important. If you are permitted to have a professional inspection completed prior to the foreclosure auction, this will give you a good idea as to a fair bid amount when considering the cost of any necessary repairs. On the other hand, a professional inspection isn't cheap and some investors may choose to complete the task after their offer is accepted. If in doubt, speak with a real estate attorney regarding your responsibilities when participating in a foreclosure auction.

Q: Are there any warranties offered in a foreclosure auction?
A: Most, if not all, foreclosures are sold 'as is' and with no warranty of any kind. This means that you, the buyer, will be responsible for any necessary repairs or improvements on the property. If possible, it's recommended to have a professional inspection conducted.

Q: What type of financing options are available for a foreclosure auction purchase?
A: As is the case with any type of home purchase, including that of a foreclosure auction, you will be responsible for making sure that the funds are in place before you agree to purchase. Whether your ability to participate in a foreclosure auction comes from cash assets or a mortgage loan, it's important to research your options before making an offer.

Q: What can I expect from a foreclosure auction?
A: Because some homeowners are forced out of their home due to unsettling circumstances, such as a divorce, job loss, illness or other hardship, the foreclosure process is understandably difficult. A foreclosed property may or may not be in good condition and could require extensive repairs. No two homes are alike in this respect as the condition of the home will greatly depend on its former residents.

Q: Will I be required to pay in full on the day of the foreclosure auction?
A: Policies vary from one auction foreclosure to another, but most will require that you at least place a good-faith deposit if your bid is accepted. In some cases, you may be required to pay for the property in full on the day of the foreclosure auction. If you have questions, contact the lender who currently owns the property or the auction house conducting the sale.

The information contained in this article is designed to be used for reference purposes only. It should not be used as, in place of or in conjunction with professional legal, financial and/or investment advice regarding the foreclosure auction process. For additional information, consult an attorney who specializes in real estate and/or financial matters.

Foreclosures
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