/ Source: The Associated Press
Sheriff's sales, trustee's sales or courthouse auctions
These are public auctions of property in foreclosure. If no bid covers what's owed on the house, the lender takes ownership of the property. "It takes a pro to buy a house on the courthouse steps. On the other hand, that's where you'll get the really good deals," says Alexis McGee, author of "The Foreclosures.com Guide to Making Huge Profits in Pre-Foreclosure Investing Without Selling Your Soul."
- Arrive with full pockets. Sheriff's sales usually require a hefty amount of the bid price upfront in a cashier's check. Some ask for 100 percent of the price with no opportunity to finance.
- Do the research. These auctions provide no information on the property, so it's up to you to research the title on the house and any tax liens on the property. There are no inspections, so be prepared for any nasty surprises if you win the house.
- Unwanted tenants. The lenders don't evict the previous homeowners before the auction. You do, which can be a frustrating experience.
Auction house sale
These auctions occur when the lender took the property back from the previous homeowner after failing to sell it at a sheriff's sale. Buying a house at these auctions is less risky, but you can pay 90 percent to 95 percent of market value, McGee says.
- Securing a deal. To bid, the auction houses usually require a minimal deposit, around $3,000 in a personal check. If you win the house, you must a give a small percentage of the sales price and you have up to 30 days to find a mortgage. Sometimes, the lender auctioning the property will offer financing.
- Take a look around. The auction companies typically hold open houses the week before the auction. Take an inspector with you to check out the house, so you have a good idea what kind of repairs it might need.
- Your first time? Bring a real estate agent along if you're not familiar with the market prices in the area, McGee suggests. Often times, the auction firm will pay the agent's commission.
- Detach yourself. "The auction houses draw a good crowd and any time you have multiple bidders, it pushes prices up. Don't get emotionally attached to anything and be prepared to bid on more than just one house," McGee advises.