Foreclosed Property Auctioneers
The steep drop in property values over the past seven years has created countless opportunities for investment in both commercial and residential real estate. Foreclosure auction company Fortna Auctioneers & Marketing Group can help you sell an unwanted commercial or residential property at its true market value, at terms and conditions established by you. If you’re interested in purchasing an REO property, Fortna Auctioneers & Marketing Group will give you the opportunity to bid fairly and competitively, assuring your transaction closes at fair market value.
Understanding the REO Market
Auctions of REO properties by foreclosure auction companies have gained in popularity recently. A foreclosure auction can be a quick and efficient way to buy properties, especially REO properties where the bank has had to take title to the property because it didn’t sell at a past auction. When the banks, or other mortgage lenders, have to take back foreclosed properties, they will most likely use services of a foreclosure property company, like Fortna Auctioneers, to dispose of the property.
Increasingly, banks are using foreclosure auctions to unload their REO properties. This trend should continue in the immediate future. Banks need, and want, to reduce the inventory of held properties that they took back in a foreclosure. These auctions have become more common as the number of homes with little or no equity has grown. Some properties have suffered negative equity — particularly higher priced homes that were recently purchased, i.e., since 2008.
What to Know About Purchasing an REO Property at Auction
Any qualified and prepared buyer has the right to purchase property through foreclosed property auctioneers. Unlike the traditional real estate market — where financing is secured after price negotiations — successful REO buyers should have funding prepared ahead of time.
In order to bid, the foreclosure auction company will require registration before the auction begins. Generally, the winning bidder must immediately make a deposit, payable in cash or by cashier’s check. A typical deposit requires payment of 5% to 10% of the winning bid amount, and the final closure on the property usually occurs within 30 days (check with Fortna to see what the actual requirements are for a property that you may be interested in). The deposit amount can and does vary from state to state and will generally be different for residential property versus commercial property.
Generally, at auction the properties are sold “as is”. However, for REO properties there is generally a post-auction time allowed for inspection and adjustment in the price not available in foreclosure auctions where the bank has not yet reclaimed the property. The best idea in either case is to inspect the property using a professional prior to the auction. The condition of the property should affect the price you are willing to bid. If the property is occupied, it needs to be understood what the terms are for the owner or tenant to vacate. If not attended to prior to the auction and close, evicting an owner residing in the property or the tenant if you want to clear out the property can take a lot of time and be expensive.
Banks, and other lenders, use a foreclosure auction company because they want to move the inventory very quickly, especially if it is an REO property. This presents the best opportunity for getting the property at a good price because the bank has already had to face the fact that the property wasn’t worth what they thought it was and are more likely to be motivated to sell at a lower price, even below the value they are carrying it for on their books.
Here are important steps to take to acquire REO properties at an auction:
REO properties are sold by the foreclosure auction companies “as is”, although you may have a chance to inspect and adjust the price after the purchase. Check with the foreclosure auction company to see if this measure is available. Again, any repair costs should be subtracted from your maximum bid amount to determine how much you really want to bid.
Review the Property Description and Foreclosure Details
You should closely review the property description, legal documents, and other data provided in the property “package” or brochure. It’s a good idea to have a real estate professional or lawyer also review the details because whatever is said is what you are bound by and what you acquire with your purchase. Bidder eligibility, financing terms, deposit requirement, required closing date, any closing costs (the auction company will usually charge a fee), the actual purchase agreement laying out the property description and physical boundaries and any disclosures and other bidding requirements will all be in the “package” or brochure. Again, you will be legally bound by these terms and conditions if you win the bid, so make sure you understand them before acquiring the property.
Have Financing Arranged
Once you have identified a property that you are interested in bidding on and have some idea of what it might cost to acquire, you need to arrange at least pre-qualification if not full qualification for financing. The foreclosure auction company may have lenders onsite who will advance the funds to close on the property, but it is always a good idea to have your financing in place before the actual auction (keep in mind that commercial property will often require more than 20% as a down payment). The closing date is set at the time of the auction and failure to follow through on paying the full purchase price will cause the loss of any deposit made. The bank or other lender will generally not provide financing on the house being auctioned.
Pre-Registration/Registration for Auction
Most foreclosure auction companies will allow pre-registration either at their office or through their website. If you plan to bid at a live auction, you will need to be registered to bid. Arrive early at the auction to get a prominent position where the auctioneer can see you and you can see the other bidders to learn of any last minute changes and to get an idea of how the “action” might occur. Also, go to the foreclosure auction company’s website to make sure the property is still being auctioned and hasn’t been withdrawn. Sometimes foreclosed properties are sold prior to the auction or the owner comes up with the necessary funds to preclude the auction.
Fortna Auctioneers & Marketing Group Drives the Auction Revolution
As a premier real estate auctioneering firm in the country, Fortna Auctioneers & Marketing Group has the connections and expertise you need to sell or purchase REO property. We will aggressively market your property to many of the most-qualified and serious investors in the world, and we’ll crystallize all interested parties in one place. We’ll conduct a fair and competitive sale among qualified and prepared buyers. This eliminates costly and frustrating haggling, while reducing your carrying costs. Your REO transaction will close within 45 days at a price that reflects its true market value.
For more information about selling or buying REO property, contact Fortna Auctioneers & Marketing Group for more information.