The foreclosure auction process is not for the weak-kneed. Experts suggest you observe a lot of auctions before you attend one where you plan to bid. This way, you can get accustomed to the environment. You can also become acquainted with seasoned foreclosure investors and may pick up a few tips from watching them or talking to them.
When you're ready jump into the fray, and after you've selected a property, done your evaluation and set your maximum price, find the location of the auction. It may be at a public location, such as the steps of a courthouse, or it may be held on the property to be auctioned. Be sure to arrive early. If you're late, you could miss the auction entirely since it may last only a few minutes.
Although the process varies from state to state, the basic idea is the same: The property goes to the high bidder in a live bidding process conducted by a sheriff, deputy or court-appointed referee. The first bid will usually be made by a representative of the foreclosing lender to ensure a minimum amount owed to him can be recovered. Keep in mind that this bid may have nothing to do with what the home is actually worth. If the home has significant damage, for example, the lender's bid doesn't take that into account. So be careful of changing your own evaluation based on the bid amounts.
- When you're ready to make a bid, some recommend you wait as late in the process as possible. Wait until the auctioneer is about to lower the final gavel.
- Don't get swept up in the moment: Stay below or at the maximum bid you determined before you arrived.
- Auctions are often postponed or canceled at the last minute for a variety of reasons. Contact the trustee or attorney the day before to confirm.