Foreclosure Process

• The foreclosure process varies from one state to the next, but some common themes are present in all of them. In judicial foreclosure states, the lender must file a lawsuit against the homeowner and get the court's permission to foreclose on the property. In nonjudicial foreclosure states, lenders can simply provide notice and then foreclose. Once the homeowner misses the first payment, it is usually about 90 days before the lender sends out a notice of sale and moves towards the foreclosure auction.
  
  

Auction Basics

• Once the lender moves towards foreclosure, it typically hires a real estate auction company to handle the process. The real estate auction company advertises the auction in the local area in an attempt to bring people in. On the day of the auction, bidders can come and register with the auctioneer before it takes place. At that point, they are eligible to bid on the property. The auctioneer takes bids and the person with the highest bid wins the house.
  
  

Requirements

• Before you can get on the property, you must meet the eligibility requirements that are set forth by the auction company. Every auction is different, but most of them have requirements as to how you will pay for the property. For example, you may be required to have a certain amount of cash as a down payment. You may have to provide a cashier's check and then pay the rest of the balance later.
  
  

Potential Issues

• Before you bid on a foreclosure at an auction, you should do your homework on the property. Leading up to the auction, many auctioneers provide you with an opportunity to tour the property. You can also do a title search on the property to find out if there are any liens or encumbrances against it. You do not want to invest in a property and then find out that it has a lien against it from a previous debt.