If you are considering an auction, here are some basics to help you decide whether to purchase a home to invest in for sale or residence.
The first thing that a potential bidder like yourself should know about residential auctions is that there are open houses, where you can walk through in advance. In some instances, you are only allowed to see the property outside.
Two Types of Housing Auctions
- Absolute Auction – the winning bidder gets the auctioned property
- Lender Confirmation Auction – the winning bidder is not guaranteed to get the property
The auction companies may choose private locations for these property auctions, such as conference rooms in hotels. They may also choose more public locations, like local government courthouses. Bank-hired trustees are responsible for foreclosure auctions. Local sheriffs conduct tax lien auctions.Residential auctions can also take place on the Internet.
Why Homes End Up at Auctions
Tax lien auctions and foreclosure auctions are two kinds of property auctions. It is a long process before a property is put up at auction. If a homeowner fails to pay their mortgage, the bank issues a notice of default after several months. The notice is done by a county recorder.
Properties are also auctioned after a homeowner neglects or ignores property taxes and state or local income taxes. When this happens, the unpaid tax authority gets the house in question.
The homeowner should try to renegotiate with the lender or keep up to date with mortgage payments to avoid a foreclosure. Foreclosure can occur after some months to over a year of delinquency.
Some things to keep in mind
Not all properties in auctions have affordable prices for home buyers. Make sure you know how auction swork, so you don’t end up overbidding on a house. Also, take some time to know more about the kind of property you want to bid on.
Buying a property at auction places poses a high risk compared to working with a real estate agent. At Wellcovered Insurance, we aim to provide comprehensive insurance policies that makes your life easier. You can get more information about our products and services by calling our agency at (386) 218-4951. Get your free quote today by clicking here.