Did you come across a foreclosed property at a prime location with an auction that has yet to happen? If you think it’s a real steal and at par with your future plans, don’t dilly dally now and get ready to bid!
While foreclosures are often bad news for homeowners, they’re sometimes music to the ears of homebuyers or real estate investors who are 24/7 on the lookout for cheap and affordable real estate. Yes, foreclosed properties are usually sold below market value to encourage a fast sale (or to get rid of foreclosure inventory faster and get back at least some of the money owed quickly).
In a foreclosure auction, remember that you’re not only competing with private, individual buyers, but you’re also bidding amongst real estate professionals who are well experienced in these kinds of auctions.
So if it’s your first time to join a foreclosure sale or you have joined before but just haven’t won yet, don’t worry; we have some tips here to help you prepare and finally get that house you want.
What To Expect During a Foreclosure Auction?
For first-timers, it’s important to be familiar with the whole real estate auction process. In the State of Georgia, foreclosure is non-judicial, which means that a property can be foreclosed even without a court order. This means that the process of foreclosing and auctioning the home is quicker than in judicial foreclosure states.
A foreclosure auction is more or less similar to all other auctions. In this case, the house for auction is made known to the public in advance, and people bid for it during the auction date. Whoever puts the highest bid wins the property (unless the auction is a reserve auction where the seller can reject even the highest bid).
The very 1st step in a foreclosure auction is registration. Whether it’s a live auction or an online auction, you cannot bid unless you are registered. Registration instructions and requirements are usually posted along with the announcement, or you can contact the auctioneer directly for assistance.
Once auction day arrives, it is assumed that you’ve done your due diligence on the property. There will not be a “virtual tour” of the home, nor a “question and answer portion” about the house. The auctioneer will usually open the bidding with a minimum bid and will close it if no bids are received.
After Auction Day
Assuming you won the bid, the next step is to arrange your payment (usually within 24 hours), secure Title Insurance, and obtain the Title Certificate (usually takes 10 days). Only when you have the Title Certificate can the property become yours legally.
How to Win At a Home Auction?
Now that you have an idea of what to expect in a foreclosure auction, it’s time to know about what you can do to increase your chances of winning the bid.
Know Your Auctioneer
Bank-hired trustees conduct the auction sale. They’re considered real estate auctioneers and have the right to set their own system of bidding. For example, some auctioneers require an upfront deposit from their bidders to prove their ability and seriousness to pay. Another is that some auctioneers need bidders to pay a non-refundable registration fee.
Auctioneers also follow either of the three (3) systems of bidding: Absolute Auction, Minimum Bid Auction, and Reserve Auction. Each of the systems attracts different types of bidders. Once you know what approach is going to be used for your foreclosed home, you’ll know what to bring to the table to win.
Research the Home Before The Auction
In some cases, bidders are not allowed to inspect or enter the foreclosed property before the auction, but they can see the home from the outside. Hence, you’ll have to bring out your inner detective to learn more about the property.
The most helpful information you can gather is the price of its neighborhood comps. With this, you’ll be able to set your maximum bidding price and avoid overpaying. People often lose in auctions because they take a lot of time thinking about whether it’s still reasonable to bid higher.
“What if someone bids even higher than the property’s current market value?” Well, that’s okay. Don’t let your emotions drive your bid. Stay logical as possible, and if you don’t win it, remember that you didn’t waste your money on overpayment.
Finalize Your Financing
While some auctioneers require winning bidders to pay 100% of the amount within 24 hours, there are also more considerate auctioneers who allow bidders to pay the total within 3 months or so. The important thing here is to have cash ready for downpayment and proof that you’re financially capable of producing the rest within your approved period of time.
Lastly, registering as early as possible allows you more time to research the property, know your auctioneer, and think of the right strategy to win the auction. Never underestimate the power of preparation because remember that you might be bidding amongst expert bidders!
We have one question for you though: Is it really necessary for you to buy your dream property during a foreclosure sale? What if we told you we could find you another similar property which you can buy without bidding? HomeSold GA is one of Georgia’s most reliable real estate experts. We connect you to the best properties and help you buy your house without all the fuss.
Contact us today at 770-668-4888 and let’s make that real estate vision of yours come to life!