What Happens to Repossessed Houses?
There are a few stages in the foreclosure process and today we will talk about what the bank does with a property once it has been repossessed. After a home has been foreclosed upon it will be transferred to a property auction for liquidation, usually called a trustee sale or sheriff sale, in order to try to regain the remaining value of the loan. These defaulted properties can be a great value to home buyers since banks do not want to hold these properties fearing costs of maintenance and property insurance so they are willing to get rid of these properties at discounted prices but these sales are also filled with risk.
Anyone may gain access to these public auctions and are usually not widely advertised as the financial institutions do not want to incur these costs. The usual starting bid at trustee sales includes the remaining amount of the loan plus expenses to obtain the title and any fees or costs from selling the property. The bid will rise from there but since these auctions are usually only attended in small numbers the price remains relatively low. If these low minimal costs are not met, as most times happens, the property will be returned to the bank for another type of liquidation.
Research is vital when attending a foreclosure property auction–trustee sale or sheriff sale– to evaluate what the property is worth and whether it is really a value. It is suggested that before you attend you establish a maximum price for the property you are attempting to own, although you will not be able to view the property interior prior to making bids at this type of auction which makes them a risky proposition. The emotion of an auction environment can get the better of some so it is important to use self control when bidding. Attending multiple auctions before you visit the one with property you wish to bid on that way you can understand how the process works and build your confidence that you will be bidding in a calm collected state. When you are researching it is important that if there is anything that deters you from purchasing you should be able to walk away and trust your instincts that it is not a wise investment.
When the property reverts to the trustee, ie the bank, they then make the choice of listing the property on the MLS (multiple listing service) using a real estate agent or they may list the property for sale with a national REO auction house–there are several of these national auction liquidators. At this stage, the risk is reduced to nothing as perspective buyers can visit the house during open houses to review condition and would therefore not be buying the property “sight unseen” as in a trustee sale or sheriff sale.
National auction liquidators typically encourage perspective buyers to not only attend the open houses but to bring along a real estate agent and an inspector to determine value and condition. This aides in determining the maximum bid you should make on the property in the auction.
National auction liquidating auctions are held either in a physical ballroom setting or on its secure online bidding platform. Online auctions give the bidder the convenience of bidding from the comfort of their own home. With our advanced platform, bidders can place monitor the auction in real-time and set their maximum bid. Highest bid at end of auction is announced as the winner.
Ballroom auctions are similar to online only auctions with the exception of the venue. Auctions are held in a venue on a specified date. Once at auction, bidders can view all information regarding auction process from one of the numerous auction staff walking around.
If you take these practices to heart and wisely research and comb through properties you will surely find a property that fits your needs budget, and means at a seriously discounted price. So go forth and bid with confidence knowing that you are getting a great property at a great price instead of the trying to buy at a risky venue like a sheriff sale or trustee sale.
And that is what happens to houses after they are repossessed. Sooner or later these houses will end up in the hands of homeowners who will take care of them.
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- Buying Property at Trustee Sale Phoenix Arizona (phxinvestmentproperty.wordpress.com)
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- To auction a property or not to auction (remueraepsomrealestate.wordpress.com)