Housing prices may have fallen dramatically in the last few months, but there is an upside. Thrifty house hunters can bid on foreclosed homes at auctions around the country, and possibly save money in the process.
Buying a home through an auction may be new to you. Here’s a quick guide to how you can get your next home for less.
Step 1: Find out where to look.
You can find a foreclosure auction online or in the real estate section of your local newspaper.
One place to start is the U.S. Department of Housing and Urban Development. You can find HUD home auctions on the federal government’s web site. Although you can search for free, HUD requires that first-time homeowners consult with one of the department’s counselors before they begin the bidding process, and that all bids are submitted through a real estate broker.
Commercial auctioneers such as the Real Estate Disposition Corporation, or REDC, also provide state-by-state listings of auctions. With REDC you’re able to bid on property yourself, but you will have to pre-register on the company’s web site in order to attend an auction.
You can also purchase foreclosed homes on the FDIC’s web site.
Step 2: Find a home to bid on.
Set a price that you can afford to bid and make a list of the things that you are looking for in a home. Once you’ve decided where you want to live and the kind of house you are looking for, you can modify your search.
Step 3: Inspect the property.
If you’re going to put money into a house, it’s a good idea to see what you’re paying for. Potential buyers should understand that many of these properties are sold “as is.” Moreover, professionals such as Bill Staniford, CEO of PropertyShark.com, a real estate data site, say there’s a chance the homes you’re considering may be damaged, so it’s important to visit a home, and give it a thorough once over before bidding on it.
“You have to take the ‘human element’ into account,” says Staniford. “The previous owner could have turned violent and ruined the house the day before the auction. You have no idea what they were going through.”
Step 4: Start thinking about your bid.
Keep track of properties you’ve seen and be sure to include what you liked and what you disliked. Separate the ones with more positive reviews and then talk to a real estate broker about crafting your bid.