The vast majority of foreclosed homes are owned by banks and mortgage lenders, but some foreclosures are also owned by local and state governments. If a person fails to pay their property taxes, the government would be able to seize their home and sell it in order to pay the property taxes that are due. Many municipalities are finding themselves with a lot more homes on their hands than they can handle just because of this. There are also all of the regular foreclosure auctions that happen on the “courthouse steps” that they have to deal with as well.
With the sheer number of foreclosure being processed through the system, many municipalities are bringing the auctions to an internet-based format. Potential buyers will place their bids online rather than showing up at the courthouse steps. The system is a lot more efficient, but it can get you into a lot of trouble if you don’t know what you’re doing.
Buying online gives the buyer the illusion that they have ‘perfect information’ and know everything about the property that they need to know, but that absolutely isn’t the case. Before you bid on a foreclosed home, you need to see the home yourself, know if it has any problems that needs to be fixed, and to a title search to make sure there aren’t any liens on the home that would need to be addressed if you purchased it.
Most people who get themselves into trouble when purchasing foreclosures simply don’t have all of the information. They don’t have all of the details about what they’re purchasing, and then it ends up costing them tens of thousands of dollars. As municipalities start selling foreclosed homes online, impulsive buyers who have “house fever” will have an even easier opportunity to purchase a house without knowing all of the information. While it may be appealing to make a quick bid to scoop up a deal on a home, you have to do your homework.
If you’re not intimately familiar with the market of foreclosures and that’s what you do on a full-time basis, you should probably steer clear of it. You can still get bargains on distressed real estate, but the best way to do that is to buy it from a willing buyer before the foreclosure process begins. This will allow you to slow down, make sure there aren’t any liens on the property, and then you know exactly what you’re getting. As an added bonus, you’re helping out a home-owner who can no longer afford their home avoid a foreclosure.
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