I get asked the question frequently… what’s the easiest way to buy a foreclosed home at auction?. Well I am not an attorney and the method is different from state to state however I can give you some basic pointers. Let me start by saying there are actually two sorts of auctions. The first type is the “court house steps” auction, this auction is held before the bank takes the home back. The second type of auction are the ones you see advertised on TV, newspapers, etc. At these auctions the lending institution has by now foreclosed on the property. Lets examine both sorts of auction.

The first type of foreclosure auction is many times referred to as the “court house steps” sale. Now in lots of situations this sale will not be actually held on the court house steps but inside the court house facility or many times in an attorneys office. But places such as Phoenix, AZ actually do have these auctions outside the court house every week. There are several risks when acquiring at this kind of auction. One is you usually can not examine the house before hand and two, you might be evicting a tenant or home owner if you are the successful bidder. Not a really nice process. If nobody hits the reserve bid that is when the lender is the winning bidder and truly takes the home back. Once this happens they’ll sell the house in one of two methods, either by a brokerage/listing agent by the MLS or by way of a second type of auction.

The second type of auction is the type you see advertised on TV, newspapers, radio, etc. These homes have already been taken back by the lender as in the example above. The great thing about purchasing property at this kind of auction is you are not performing any evictions and generally you’ll be able to examine the property. The biggest down aspect to that is there are usually many bidders on a specific home. Many of those bidders are inexperienced and in the “heat of the second” many of those properties get bid up and bought for more than they’re actually worth. You additionally need to have cash (or hard money lender which is a complete new topic).

The predominant thing to remember when acquiring at either type of auction is do your homework. Many individuals go in blindly and buy a property only to realize they did not get a great deal. As with anything the ones who do there “due diligence” and put in the effort are the ones who get the nice deals. Be aware that this process does require a fair period of time if you wish to be successful. If you can’t commit the time to buying property in this way you probably shouldn’t.

Ken is a Realtor in the Phoenix region and focuses on Trilogy Power Ranch homes and other Arizona golf communities