Foreclosure Auctions : A Boon For Investors

Posted in Foreclosure Auction, October 23rd, 2007 |

On the first Tuesday of every month it is a bonanza for investors who throng the Coweta County court. For weeks they had been preparing for this day when foreclosed properties were going for a song. The bidders are a patient lot

There are so many investors in the fray that classes and courses are being held to show them the ins and outs of foreclosure auctions. Bobby Gaines is the Director of one such unit teaching novices about tricks of the foreclosure game. The classes have become extremely popular with packed lecture halls. Future dates are all booked up.

Foreclosure sales are also termed distressed sales. By this legal step the mortgagor loses all his rights to redeem the property. The rules of foreclosure differ from state to state. In Georgia the lists are published in newspapers four consecutive weeks prior to the sale with relevant details like location, date, debt amount, names, deed book, page of security deed etc. Here it is a non-judicial process and is speedy since it does not require the signature of either judges or other officials.

Gaines explains about three types of opportunities investors have. These are pre and post foreclosure sales and REO or Real Estate Owned sales. It is best to opt for the pre-foreclosure sales because of less competition and more properties available for comparison. There is the possibility of closing directly with the attorney and less initial cash payment. The sellers are keen to sell off and avoid the stigma of foreclosure. On the negative side, junior liens are not wiped out. Real estate agents are the best advisors on pre-foreclosure sales.

A foreclosure sale in the courthouse wipes out junior liens. The opening bid is inclusive of total debt, late fees, penalties and legal fees. Certified cheques have to be kept ready.

REO’s are not courthouse sales. Banks and lending houses avoid it because the federal authorities frown on it. They are not many to pick and choose from and are listed by insurance agents. A regular attorney can complete it and the units are bought on the basis of as-where-is.

The investor should consider the problem of repairs and hire professionals for appraisals. The Internet is unreliable for title searches. Other real estate, legal and insurance, tax etc professionals should be taken into confidence to make the best bargains with equity.