Auction companies are the ones gaining the most in this widespread use of Foreclosure Auction. They became busier than ever. When lenders and homebuilders are ready with foreclosed homes, they hire auction firms to find buyers. These thousands of foreclosure filings made each month have attracted large numbers of investors in foreclosure auctions due to the good deals embedded with each foreclosed property. This increased the opportunities of the auction companies to a great extent.
Due to the popularity gained by foreclosure auctions, new players started to enter into the auction business. The large numbers of ready-for-auction foreclosed homes led some real estate companies to taste the success of the aforementioned auction business too. These real estate companies also started an auctioning division to compete with the traditional auction firms. Since the number of foreclosed homes is incrementing on a continuous basis, the auction business proves to be one of the most profitable investments that will run for a long time.
Buyers became increasingly interested in bidding at a foreclosure auction because of the great bargains involved. First time buyers and real estate investors are attracted by the ever decreasing prices of houses as well as the comparably cheap amount of mortgage. The deals will rarely be disappointing in foreclosure auctions because the sellers are mostly government bodies who are least concerned about making profits. Furthermore, the prices of foreclosed homes are much lesser as compared to those available in the real estate markets. Many of the buyers also enjoy the environment of bidding in an auction rather than dealing with a seller face-to-face. These are some of the reasons why buyers have been pulled towards home auction.
Before the event starts, buyers are required to register in order to receive a bid card for the auction proper. Bidders must also bring with them the required amount of cash or cashier’s check, which all depends on the properties being auctioned by the auction company. Upon winning the bid on a property, the winning bidder must pay a percentage of the price as well as the amount of commission to the auction company. In some instances, bulk buyers are required to pay more and the required financial arrangements have to be made the same day.
The areas which are prone to foreclosure auctions are mostly the locations where the developers have overbuilt properties. They have either overlooked the economic downslide or the slow moving real estate business in those areas. Some buyers in foreclosure auctions are either looking for a place to settle down in or simply looking for a cheap home property to develop and sell in the future.
Most of the auction companies appoint their own bidders, otherwise known as shills, to conjure a bidding competition in order to tempt the “real” bidders to bid higher, thus increasing the selling price of the auctioned property. This must be disclosed before the auction begins so that the actual bidder knows whether he is bidding against an actual buyer or a shill. This practice is prohibited all over the Unites States; however, there is a lack of monitoring bodies to facilitate a fair auction. Sadly, this is mainly used by the auction companies to increase their commission amount. It is wise to be on the look out for such bidders that you may have seen working before the auction began.
A buyer should always be cautious when deciding to attend an auction. Only go to licensed auction companies or real estate brokers who can give you a clearer view on the properties being auctioned as well as provide the pros and cons of each property. It is better to go for absolute auctions rather than reserve auction. You should be certain that the auction companies allow you to represent your own attorney. Always remember to collect all the required information before attending an auction, so as to avoid surprises in the long run.