So often I am asked by buyers about foreclosure properties and how to buy them at Auction. My answer to this is you never want to buy a home at an auction if you don't have to. I will come back to this point in a minute.
There was a time when the only way to get an extraordinary deal on a foreclosure property is at a Bank Auction. But these days are quite different. There are so many foreclosures that the banks will never be able to sell them all if they relied on just the auction process which is why the banks are listing these properties with Real Estate Agents. That means that you can purchase the property with the necessary contingencies in place that protect you , the buyer from any unknowns and from taking on any financial risk.
The difference is this. At auction, you must have a bank check of $5000-$10,000 to put down as a deposit.You are not able to preview the property and inpsect for deficiencies that my cost a bundle to fix. And if you do not proceeed with the purchase, you are in default and lose your deposit. Lastly, many of these properties have inherited unpaid taxes known as encumbrances that the new owner must pay. So there is a great deal of financial risk. That is why, the only good candidate for a purchase at auciton is a cash buyer with deep pockets and the ability to assume the risk. If this does not scare you, this might.
Owners who have lost these homes to foreclosure are not happy people. Rightfully so. But they take out their frustrations on the house by extensively damaging the plumbing, heating system, removing pipes and sometimes entire kitchen. Issues you can't always see by peeking through the windows.
Instead, what you will want to do is enlist the help of a qualified, experienceed, full time Realtor. This agent will represent you by submitting your offer to the bank and yes, you can "lowball." In fact, I recommend it. They can always come back with a counter offer which may be much lower than you think. Once accepted and under agreement, than you can inspect the property with a home inspector to look for any of these damages that may cost a bundle to repair. And while contract laws vary from state to state, the essence is, you are protected by the terms of the agreement should you not want to go through with the purchase or if you were unable to obtain the necessary financing. Your Realtor will guide you through this process. The good news is, you do not have to take on unnecessary risk in buying a foreclosed property to get a good deal. Banks are willing to negotiate. Just don't expect the bank to make any repairs as these properties are being sold in "As Is' condition most of the time. You can always ask and see what happens, but don't go in with this expectation.
Elise Vetri is a RI based Realtor that specializes in foreclosure buyer representation in Northern Rhose Island.
www.elisevetri.com