After payments are late for 90 days, a house is usually foreclosed upon. The homeowner cannot stop this process and the property usually goes up for auction. The process of a home going up to auction requires a lot of work and involvement by the county where the home is located as well as investors that want the property. To participate in a home foreclosure auction, you should know the process beforehand. Here are the steps that properties take before, during, and after an auction.
Scheduling a Foreclosure Auction
Before any property can go up for auction, it must be scheduled. For people to see it, it also must be advertised. The job of the counter tax assessor office is the one that schedules an auction for various properties. Each state advertises the house for a certain amount of time, usually by a local newspaper.
On top of this, the current homeowner is notified and a notice of foreclosure is placed on the home. There are websites that are dedicated to displaying recent foreclosures, but it’s important to verify the validity of these auctions.
Once the advertisement period is over, a house goes up for auction. This is usually the time that the owner has a chance to pay on the loan and stop the auctioning process.
Auction Rules
Each county has a public place where auctions are held, and every auction house has its own rules. Most people are familiar with minimum bid format where bids are placed until the highest bid wins. In an absolute auction format, properties are sold to the highest bidder regardless of the price. Finally, there is an auction with reservation formation. This is where the seller of the auctioned property may reject the sale for any reason. This process is rarely used for foreclosures because the seller generally has no choice but to sell.
Identity Verification
Auctions are usually done using cash transactions, so the identity of bidders becomes important. The ability to pay for a property before the auction begins is essential in home foreclosure auctions. A bidder must show proof of funds before the auction can start. This can be done by simply showing a cashier’s check or by providing a deposit that is refundable if you lose. Each auction house handles this process differently, so it’s important to understand this process before bidding.
Sale at a Foreclosure Auction
After being verified, anyone the trustees approve may bid on the home. At this point, the bidding begins and continues until a single bidder is left. This is the winner of the auction, and they become the new owner of the property. Generally, most auctions are done in public where bidders must appear in person, but some auctions allow Internet bids. Some may require sealed bids before the start of the auction. Check with the county’s foreclosure auction laws to know the format beforehand.
Right of Redemption
The “right of redemption” is a provision that allows the previous owner of the home to regain their property even after it’s been sold at an auction. To do this, the seller must pay the defaulted amount as well as any fees associated with the property. The right of redemption time period varies based on state laws. If the home sells for the full amount of the loan, the right of redemption period lasts for 90 days.
