Do Home Foreclosure Auctions Work?
When a home goes into foreclosure, it normally means the person who owns the home is 90 days or more behind on his payments. At this time, the creditor can begin foreclosure proceedings. If the homeowner can’t halt the foreclosure, the property goes to auction. The procedure for selling a home in foreclosure requires the engagement of the county where the home is located and willing investors that wish to purchase the property.
Assessing the Auction
Before a property can go to auction, it has to be scheduled and advertised. The county tax assessor office generally handles the scheduling of this auction, but the process is up to each respective county. Each state has a period of time the house has to be advertised. In California, as an instance, the property could be marketed 21 days following the first book of this auction. Advertising occurs from the press, most notably the local paper. Moreover, the home’s present owner has to be informed and a notice of the foreclosure has to be put on the home. At the era of the web, websites exist which are devoted to advertising foreclosures. They are searchable by city, state and zip code. At the close of the advertisement period, the state permits the property to be offered at auction. In this period of time, the owner of the home has the right to solve the delinquency on the loan and block the auction.
Auction Rules
The county where the auction occurs utilizes one of several auction formats. At the minimum bidding format, the seller sets the minimum bid, and people bids are taken from there until the highest bidder wins. From the absolute market format, the residence is offered to the highest bidder, irrespective of the price. At the market with reservation format, the seller of this auctioned home may deny the purchase for any reason. This is not normally utilized in foreclosure auctions, since the seller has no option but to market.
Verification of Bidders
Because auctions are often money transactions, the county may require that any bidder verify her identity and ability to pay for the house before the auction starts. Proof of funds can be as straightforward as supplying a replica of a cashier’s check into the auction deductions until it starts. The evidence of funds may include a deposit that’s refundable if you do not win the house or can’t complete financing for your purchase in just 30 days. If you’re pre-approved for a loan to get the property, consider that paperwork into the auction.
Sale of Home
Most auctions for foreclosure are people and involve bidders that appear in person to purchase the home. But normally once the bidding starts, anyone accepted by the trustee may bid on the house until only one bidder is left standing. That bidder becomes the owner of the home. Some auctions let Internet bids; others require sealed bids until the auction starts, with the winner being the highest bidder. It is important to confirm the county’s foreclosure auction by-laws to understand which auction format that the county utilizes.
Right of Redemption
The right of redemption is a provision which permits the seller of the home to re-acquire the property, even after it’s sold at auction. To do this, the seller must fix the default on the loan, plus cover any associated fees. Each state has its own right of redemption period. In California, the right of redemption for a foreclosure sale lasts for a year. If the home sells for the complete amount of the loan, then the right of redemption period lasts only 90 days.