A foreclosure is a situation in which a lender or mortgagee takes control of a mortgaged property, when the mortgagor is unable to make payments to pay off the mortgage. It is an opportunity where people can buy real estate for a lower market value if they have the funds to pay for a house with cash. Most people buy properties at foreclosure auctions with the intention of living in, renting, or selling them for a profit.

Where we live in Alameda County, California, our County Recorder’s Office allows people to come into the office and use public computers to do whatever research we want on any property in the county. Those are the records of all the real estate properties for the cities in our county. We cannot go to a city like Dublin, San Ramon or Pleasanton as everything is recorded at the county level, not at the city level. We can seek notices of default and fiduciary sales to pursue foreclosures. We can even see the trustee’s deed that was recorded after a homeowner lost their home in the foreclosure sale (trustee sale) on the steps of the Courthouse.

In a foreclosure auction, you will notice that a bank takes possession of the property from the mortgages (homeowners) due to missing payments. Since banks do not indulge in the real estate business, they sell the property as quickly as possible. All the bank is concerned with is instant cash and therefore it can find properties that sell for a lower market value. A bank does not act like an investor or homeowner who would try to get the maximum benefits from a property, it just tries to get the money back slowly. If you are interested in visiting a foreclosure auction, you can check your local newspaper for the Trustee Sales Notice or check with your county Recorder’s Office for the Notice of Default.

Many times you will notice that the properties that are sold at a foreclosure auction have other links besides the mortgage. Therefore, you may want to do a thorough research before attending the auction. It is a good idea to write down the value of the property in the surrounding areas, the types of houses that are sold in that area, etc. Cross-confirming the prices of people living in nearby areas and real estate will help you judge the real price of the property. You should also consider the condition of the property so that you can estimate the cost of repairs and include it in your bid price.

Before the auction begins, you will find an auctioneer who will give you a legal description of the property, after which the bidding will take place. People who attend the foreclosure auction are asked to pre-qualify before they can start bidding. To qualify in most states, you must bring a cashier’s check to bid, some states require only $ 5K to bid and the balance in 24 hours, while other states require the full winning bid amount to be provided in checks of box. As in any other auction, the auctioneer attempts to raise the bid after having placed an opening bid. At the end of the auction, the person with the highest, buys the property. If no one makes an offer, the banks repossess the property and it is now known as REO – Real Estate.

Once the auction is over, the attorney signs a “Deed of Trust” and a brief history of how the process was completed; then you register it with the County Recorder’s Office. The new owner (auction winner) will generally change the locks if the house was vacated and take control of the property. If the previous owners are still in the property, the buyer must complete the eviction process to remove the owners.