1. How Do Foreclosure Auctions Work
Learn how to verify foreclosure auctions and laws, make bids and take ownership of properties.

2. The Foreclosure Process
Normally, a property which is delinquent in payments for 90 days or more can be started through the foreclosure process by the lending institution
A legal notice of foreclosure, Demand Letter, is sent to the owner
If no response, the property is submitted to court for formal foreclosure proceedings

3. Scheduling & Advertising
Property and home auctions must first be advertised
An auction date is set after a period of advertising time which varies from state to state
A Notice of Foreclosure is placed on the property & the owner has until the auction date to settle the delinquent loan amount to stop the auction

4. Auction Formats
Minimum Bid
Absolute Auction
Auction with Reservation

5. Bidder Verification
A bidder must provide proof of funds that they can pay for the property before the auction begins
Cashier’s check for a deposit
Pre-approved loan paperwork

6. Who Can Bid On Foreclosure Properties
Most home foreclosure auctions are public
Everyone approved by the trustee can bid
Some auctions allow internet bids
Some auctions only accept sealed bids
Check county foreclosure auction by-laws for correct bid format

7. Right of Redemption
A period of time after the property sells at auction in which the seller can reclaim the property
Seller reimburses the amount of the purchase, plus associated fees
Right of Redemption period varies from state to state

8. Preparing for Foreclosure Auctions
Acquire current auction information
Personally visit and inspect properties in which you are interested
Develop a system to track foreclosures of interest

9. Acquire Property Information
What is the estimated market value?
Include repair or improvement costs
Stop bidding when the property ceases to be a bargain

10. Acquire Property Information
How much is owed?
Opening bid is based on the amount owed to the foreclosing lender
Properties can quickly cease to be a bargain once bidding begins

11. Acquire Property Information
Are there other liens?
In many cases, the winning bidder is responsible for paying off any liens on the acquired property
Check for liens through a real estate attorney, title company, or personally check county records

12. Confirm Auction Status
Confirm the current status of foreclosed homes
Verify that the owner has not paid the amount in arrears
Auctions are often postponed or cancelled without publishing new information

13. Confirm Auction Location
Is the auction at the property site?
Is the auction at a common site where multiple properties are being auctioned?
Check with a foreclosure listing service, county clerk, or property trustee

14. Confirm Auction and Bidding Format
Find out what auction format is being used
Confirm options for bidder verification
Confirm the bidding procedure

15. Determine Bid Cap Access what is considered a bargain price
Reasonable auction purchase amounts are 20% or more below the full market value
Consider repair and improvement costs
Consider the area’s rate of real estate appreciation

16. Determine Bid Cap Figure in available financial capital
Equity line of credit on an owned home
Approach the bank for a loan against a Real Estate Owned (REO) property

17. Bidding on Auction Homes
Confirm the property status and auction date again the day before
Arrive early
Locate the auctioneer as soon as possible to ensure validation
Watch your competition
Stick with the bid cap!

18. Winning Bidder Secure all necessary documents from the auctioneer
Clarify next steps with the auctioneer and real estate attorney
Check on ownership transfer and redemption periods
Do not make repairs or improvements until the home has been legally transferred

19. Bank Foreclosures Versus Government Foreclosures
The main difference is that the government often forecloses due to missed tax payments
Auction winner must pay delinquent taxes as well as other fees
Both offer lucrative investment opportunities
Verify government auction format and bidding procedures

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