Yesterday I discussed buying a foreclosure during the pre-foreclosure process, and today I wanted to move along in the series to the public auction phase. Once a homeowner is foreclosed on, the banks will hold an open auction for the home.
The public auctions in Logan, UT are held at the Logan justice court located at 135 North 100 West. In order to participate in the public auctions, you must have a partial down payment up front and you have to pay in full within 24 hours of the auction.
You can find all public notices by visiting the city recorder at the courthouse or online at Utah Legal Notices. (Link takes a while to load so be patient.)
Attend An Auction To Learn The Process
If you’re new to the process, the best thing you can do is attend one in person before you start bidding. These auctions are public so it won’t hurt anything to get in and get a feel for how the auctions in your area are conducted.
The auction will start out with the listed opening bid and can go up from $1 to $1,000′s of dollars at a time. Just like any auction, if no one bids, than no one wins. The home will become bank owned and will be listed by the bank, a Realtor, or a government agency.
Once the bidding starts it’s free reign. As an investor, don’t get caught up in the excitement and over do it. Since most auctions require you to pay in full at the auction or within 24 hours, you won’t have much time to get extra funds if you go over your planned limit.
Do Your Homework Before Purchasing At Public Auction
Buying Logan Utah foreclosures at auction is not for the first time investor. There are too many potential hazards that you won’t know until you purchase the property and do a full inspection. However, if you feel comfortable purchasing a foreclosure this way, let me give you some helpful tips.
You should develop some sort of system to track foreclosure properties that interest you. Start your research in the early stages. Once you see a notice of default on a home that is within your criteria, you should drive by the home to get an idea of the condition of the home.
The condition of the exterior of a home can give you a general idea of the condition on the inside. Remember, if you purchase a home at auction, you won’t have enough time to properly inspect it, which is why it’s so important to do your due-diligence on a property before the auction.
When driving by, try to find a talkative neighbor to get the scoop. Ask them about the neighborhood, if they know anything about the property, and ask them if they know anyone else who has information. You might also be able to talk to the owner about the property, but tread lightly. Distressed homeowners won’t be too happy having you poking around their business.
You’ll also want to run a preliminary title report on the home before you go to auction. If their are other liens on the property, you could face some serious financial burdens if you purchase. You can obtain a title report from any title company here in Cache County.
Why Buy At Public Auction?
Most public auctions don’t work out. It’s hard to come up with the funds, and even though a bidder may win the bid, the bank may refuse the amount. If the bank doesn’t get enough from the auction they won’t let the home be sold and they will repossess the home.
Also, you most likely won’t be able to inspect the property prior to purchase which can lead to huge financial problems. It would be a safer strategy to wait until the bank repossess the home and buy it then. So, why even bother with a public auction?
That’s a good question. To be honest, I wouldn’t recommend buying at public auction unless you’re sure the property is in good enough condition that it won’t cost you a ton of money to make it livable.
Another reason is, of course, the potential to get a screaming deal. Most auctions start out well below market value, and if you can get a winning bid below market value that the bank accepts, you just gained instant equity. Other than those reasons, it’s just way to risky.
Buying a foreclosure at auction should not be taken lightly. If you’ve never done it, be sure to attend a few auctions to get a feel for the process. Make sure you do your homework on the property, and don’t over bid or get so excited about a property that you pay so much you don’t have enough money leftover for repairs.
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