When a mortgage loan borrower has failed in making three consecutive repayment installments, he is likely to be in a position whereby his home is placed in foreclosure.
It is a fact that once this has happened, the lender is legally entitled to request that the borrower pays the principle balance on the loan in its entirety.
The county and city courthouse buildings post a Lis Pendens which shows exactly what properties are in pre-foreclosure and what the due date for these home auctions are.
Due to the financial crisis that the US is currently experiencing, foreclosures of every description are spiraling out of control, and investors are able to take advantage of this market.
The supply is definitely outstripping the demand creating a buyers market and making home auctions the place to purchase real estate for both home buyers and investors.
In fact more property purchases are made in the foreclosure market than any other real estate market at present.
Buying during pre-foreclosure and home auctions carries the greatest risk for an investor, but also provides the best rewards.
As long as you know everything there is to know about the process leading up to home auctions and the auction processes, you stand a fine chance of landing a beautiful home at a greatly discounted price, or making good profits.
Home auctions are generally advertised in advance, usually around 4 - 6 weeks before the auction is scheduled to take place.
However in some states this may be as much as 6 - 8 months in advance.
So check your state regulations to determine this.
Home auctions that are advertised so far in advance will allow the home buyer or investor ample opportunity to research the property and the condition of the title deed.
Title deeds in pre-foreclosure that are scheduled to be sold at home auctions often have many liens attached to them.
If the liens, particularly tax liens are more than the value of the equity in the property, then it might be wise not to bid on them.
Tax liens have to be paid, if not, the IRS will attach the property, even if you are the new owner.
It is not easy to inspect a property up for sale at home auctions, this is because the present home owner is more than likely still in residence.
It is valuable to try and at least inspect the exterior of the property.
A deed search will also tell you if any part of the land has previously been sold off and give you a better idea of what you are bidding for.
If you are a new investor or home buyer, it is advisable to try to attend a couple of auctions prior to the one where you want to actually bid.
This gives you an idea of the processes at hand in preparation for your debut.
Many investors find home auctions to be fun and have made a very lucrative hobby out of attending them.