Many buyers still bid at foreclosed homes auctions despite not being able to inspect the property beforehand because they can rationalize that the low price of the home would leave them enough funds for repairs. There is also the problem of eviction if the former owner refuses to move out after a winning bidder has purchased the property. At its worst buyers who refuse to leave may attempt to retaliate by causing further damage to the property. The new owners would then have to resort to eviction or they may try to work out an arrangement for the transfer of the former occupants to a new home.
Tips for Buyers
Before attending foreclosed home auctions, make sure your finances are solid. Auction homes are sold to the highest bidder so one has to be sure that they have the funds to back up any bid that they place. Buyers must have cash on hand to pay for the deposit of around 10 percent of the opening bid which is payable upon registration. Since auctions are public events anyone can actually watch the proceedings without participating.
If buyers are still willing to participate in a public auction without being able to inspect the home they should likewise be prepared for any problem that may arise as a cause of this. Keep in mind that the previous owners may not have the resources to maintain the home in the first place if they are also unable to keep up with their mortgage payments. Finally, eviction is the burden of the new owner of the home.
Apart from not being able to conduct a formal home inspection, buyers have no warranties on the state and the ownership of the property. They are likewise blind to the main reason for the foreclosure. Homes may be foreclosed for a number of reasons including mortgage default, back taxes, government seizures due to criminal or civil liability. Another drawback is that the sellers of the property are under no obligation to disclose the current physical state of the property. So you can easily become the owner of a home with a leaky roof, damaged wirings and issues relating to fire hazards and water damage.
Indeed buying at foreclosed homes auctions may be likened to a gamble where there are equal chances of winning or losing, but if you approach the process with research and diligence then you increase your chances of winning.