Purchasing a home is an exciting time in your life. Submitting a winning bid on a foreclosed home that is being sold at an online auction that you and your partner really want to buy can be even more exciting. Before actually making your bid, there are some facts and some pitfalls that you should consider.
How it Works
When a home is foreclosed on, lenders may sale the home at auction to try to recoup its losses. Some lenders set minimum bids while others do not. Minimum bids may not represent a good price for the home, depending on how much equity the original owner had built up before the foreclosure. If the owner was only in the home a year or two, there will be almost no equity and may not be the good deal that you are looking for. Equity is the difference between how much is owed to the lender on the original mortgage along with the costs of foreclosing on the property and the fair market value of the home.
Individuals who would like to purchase the property attend the auction and place their bids. Bidders must be equipped with either cash or proof of financing at the auction. Once all bids have been submitted, the highest bidder becomes the new owner.
The Pitfalls
Homes that are sold at auction are sold “as is”. This means that there are no guarantees on the condition of the home. Lenders generally will not let you into the home or allow inspections prior to the auction. This means that, no matter what problems the home has, you will be financially responsible.
The home may not have a clear title. This means that there could be liens on the property that have not been disclosed due to mistakes by the lender. In that case, title insurance companies will not insure you against any future problems that may arise from issues that a title search did not disclose. To avoid this problem, you could hire a title company and, for a fee, they will research the title and let you know if it is insurable. You should have this done prior to the auction.
Lenders are required by law to give homeowners notice that their home has been foreclosed, but lenders do not evict them. If the original owners are still living in the home after you purchase it at auction, you will be required to follow the legal eviction procedures in the state where the home is located. Although laws vary, you will basically need to file a lawsuit and pay the associated legal expenses and court costs.
In many states, the original homeowner has a certain amount of time that is dictated by law to buy the house back. This means, for example, that he or she may have six months or a year to pay you the price that you paid in purchasing the home at auction plus interest. If you make any improvements to the home during that time, you will lose the money and the labor spent making those improvements.
Hiring an LGBT Real Estate Agent
As noted above, there are many variables that can affect the purchase of a foreclosed home that is sold at auction. A reputable LGBT real estate agent will be aware of all of the issues involved in purchasing a foreclosed home at auction and will look out for your best interests during the entire process. The best way to locate an experienced, reputable agent is to conduct a free, no obligation search online. Be sure to check these Estate Online Auction Sales to get more information.