- Bidding process
- Amount of deposit
- Where the auction is held
- Whether the home owners can get their properties back after the sale
Solutions to 6 common foreclosure auction challenges
1. Challenge: Getting reliable information about foreclosure sales. Many companies charge fees to send you lists of foreclosures that may not be current, or sell expensive foreclosure-buying “systems” that promise to teach you how to make millions in real estate.
Solution: The best thing to do is to contact The Hagley Group and let us help you.
2. Challenge: You can’t get inside the property before the auction to inspect it for structural problems and repairs. Many foreclosure auction properties are in bad shape because the owners couldn’t afford the upkeep. And sometimes angry home owners purposely damage the property to punish the foreclosing lender.
Solution: Walk around the home to check its exterior condition. If it’s vacant, look through the windows. Ask the neighbors what they know about the property.
3. Challenge: You need to figure out the market value of the house to prepare your bid.
Solution: Ask he Hagley Group to do a broker’s price opinion (BPO) on the home you want to bid on. The BPO will show you comparable sales, telling you what similar, nearby homes that weren’t foreclosure sales have recently sold for.
4. Challenge: You don’t know if there are liens on the home. Some auctions don’t give you clean title to the property, meaning liens from the federal government or other entities may not be removed during the foreclosure auction process. You’d have to pay off those liens if you won the property.
Solution: Focus your efforts on two or three homes in desirable locations. To find out about any liens, pay a title company to run a title search on each property and issue a commitment to insure the title after purchase.
5. Challenge: You have to pay cash and pay it quickly. Most auctions require bidders to come up with the full purchase price in cash within 30 days.
Solution: Don’t count on getting a mortgage that fast. Look for other sources of cash that make financial sense for you.
- Take out a home equity line of credit or do a cash-out refinance.
- Tap retirement accounts, provided it makes sense for you from a tax perspective.
- Work with other investors to fund a partnership to invest in foreclosed homes.
6. Challenge: You’re in love with a house that you’re aware is headed to foreclosure, but you’re afraid to bid on it at the foreclosure auction because you know nothing about the process.
Solution #1: Contact The Hagley Groups and offer to purchase the home as a short sale. That’s where the bank agrees to let the owners sell for less than what they owe on the mortgage.
Still have questions? We have answers. Call us at 925-824-4877.