Auction is the stage of the foreclosure home process when the pre-foreclosure phrase of a foreclosure home has ended. Lenders will bring the title of the foreclosure home for auction and looking for new owner of the foreclosure home. The purpose of the lenders putting the foreclosure home on auction is to recapture the losses that the previous owner caused. There is only business in auction. People bid and the highest bid win the foreclosure home.
To win in auction, you must have understood the process of foreclosure auction. In most of the cases, lenders are the first mortgage holder of a foreclosure home. Thus, the fund collected from auction has to first give to the lenders. Once the first mortgage holder has been satisfied, any extra funds will be used to settle any other remaining obligations. Then only the funds will be disbursed to the foreclosure homeowner if there are any remain.
1) Foreclosure Home Title Research
Who don't want to make money if there are chances? To make money through buying foreclosure home in auctions, there are a few preparations you must do. If you are seeing a foreclosure home, you must first do a title research on it. The goal of doing the title research is to determine all the liens or judgments against the foreclosure home. These can include civil lawsuit judgments, unpaid personal property taxes and state and federal tax liens. This is because if you got the hammer knock on the foreclosure home, you will be granted the title to the foreclosure home subject to all liens and encumbrances. If you misjudge the hidden liens, there will be extra costs in your planning.
2) Getting Finance
Secondly, after doing the foreclosure home research and info collections, you need to be ready with financing. This is because in order to bid in auction, you need cash or cash equivalent to show you're affordable to participate in auction. They will record your cash amount and that will be your limit to bid. If your bid exceeds the limit, your bid will be counted as invalid. Besides, when you present the winning bid, you will need to pay a 5-10% deposit on the spot as the conclusion of the auction while the balance of the purchase price due within a few days. You will need financing to back you up immediately.
3) Psychology Preparation
Thirdly, the psychology preparation you need is to get yourself used to the auction environment. It's recommended that you attend the auction for a few times before making the first bid. This act will help you to get comfortable with the auction process and give you confident. Auction is very intense during the process. People will easily get controlled by the intense environment and get high in auction. This is always the cause of mistakes. For foreclosure home, if your bid exceeds the value of the house, you will earn nothing though you've won the auction. Thus, you have to set a bottom line in your bidding and stick to it. Most importantly, stay firm with your bottom line in auction and don't easily get affected by the intense environment there.
Buying a foreclosure home in auction could really be a great bargain. Because a foreclosure home is being sold based on the balance of the loan but not on the market value. That means a foreclosure home is more profitable if the differences between the balance of the loan and market value is huge. Buying foreclosure home in auction can bring you fortune. If you are a home buyer, u save money; if you are an investor, you make money when reselling the foreclosure home with market value. Either way, to enjoy the profit from foreclosure home, you need to first start your research with free foreclosure listings now.
For being involved in both home loan and real estate career offline, Shawn Daren is experienced to share his knowledge with us. Visit his site to learn more on free foreclosure listings and how to buy foreclosure.