So you want to buy a bargain foreclosure and take advantage of a unique buying opportunity in Atlanta or Georgia? Public lender foreclosure auctions can be a great experience and offer some exceptional real estate values. Prospective buyers need to be very aware, however, and understand how to safely navigate the reo waters.
Check the Sunday Homes section of the Atlanta Journal-Constitution or search the web for upcoming auctions. REDC www.auction.com is a leader in these types of auctions, which can be attended locally or via the website. Auctions have been coming about every 4-6 weeks.
The properties come from various lender's foreclosed home inventory. They have "clean" insurable titles, with no liens or taxes due, unlike the risk buying a foreclosure on the courthouse steps. Here are the basics, but be sure to carefully read your auction company's rules and regulations:
1. Get pre-qualified. The first step before wasting your time or jeopardizing your earnest money deposit is to get pre-qualified by a qualified lender. Explain you may be buying an auction property, which can have limits to financing program eligibility (some can't go FHA) and does not allow "seller paid contribution" negotiations to help on closing costs. Know your maximum sales price limits.
2. Attend the open house. Properties are usually open for viewing and inspection the two weekends prior to the auction event. This is your due diligence period. After the auction, the properties is yours and you are not permitted access to the property until after closing.
3. Register for the auction. It is usually free to register and attend the auction, but you will need a cashier's check for $2500-$5000 in order to get an active bidding number.
4. 5% auction fee will be added to your winning bid. For your first property you will need a 5% earnest money deposit at the auction. Additional properties jump to a 15% earnest money deposit. You don't want to mess around with the non-refundable deposits (see point #1, above).
5. Know your property. Some properties are sold as "cash only," usually due to potential property condition appraisal concerns. Property taxes and assessment vary widely these days, so be sure to check so you know your estimated monthly payment. Last year's taxes can be found on most county websites. HOA fees, if any, also vary between projects, especially with condos and townhomes.
Note: Unless you are attending an absolute auction, winning bids may still be subject to seller approval, if the reserve is not met.
Good luck!
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