Doron F. Eghbali Residential Real Estate Law Blog on Lawyers.com

Purchasing a foreclosed home at an auction is an arduous, risky and sophisticated task. After you have done your own due diligence, you might not even obtain the house you have dully researched. However, it makes sense to ascertain some of the steps to understand the process better.

CAUTION

This posting ONLY provides some preliminary steps. This posting in no way supplants the expertise and insight of an ethical foreclosure maven. In fact, it is extremely important to note purchasing a foreclosed home without the help of ethical experienced individuals is very dangerous. Despite what you think you know, there are still many other factors involved.

1. Associate with an Ethical Experienced Individual: Many foreclosed properties worthy of investment are snapped up by experienced investors even before reaching the courthouse for auction. You should find an ethical broker with lots of experience and insight and do the same with extreme caution.

2. Attend Several Sheriff's Sales To Familiarize Yourself with the Process: This is very important to go to a few sheriff's sales to see the process first hand. This makes you question yourself or your broker about how other people are doing it. You see what works and why the winner of the auction made an intelligent decision or paid too much.

3. Look at Your Local Newspaper and Subscribe to Paid Sites: You can take a look at the classified section of your local newspaper. Most states require sale notices of foreclosed homes to be published consecutively for some weeks in a newspaper. Alternatively, you can subscribe to paid websites.

4. Determine the Value of the Foreclosed Home: After you know the address of the foreclosed home, go to sites like zillow.com. Ascertain what the property is worth. Decide on the price you are willing and able to purchase. Do not allow anybody at the auction to influence you to change your price. At the auction, it is not matter of pride. It is a matter of financial prudence. You should pay at least 70% of the home value. The reason is you will have to pay more in costs and repairs.

5. Drive By the Foreclosed Home and Survey the Area: This is important to survey the area during the day and night. Although you are not allowed to get into the property, you can still drive by the property and see the neighborhood. 

6. Check the Courthouse Records: This is very important to check the courthouse records for any liens or encumbrances on the property. You might be on the hook for such liens and encumbrances even after you purchase the foreclosed property. For instance, if the second lien holder is initiating the sale you might have to pay off the first lien in addition to the auction price.

7. Prepare to Lose the Auction: Even after investing money and time into your purchase, there are no guarantees you will purchase the property. In fact, in most states, homeowners have until one business day prior to the auction to redeem the house by paying all missed fees and mortgage payments.

SOME CAVEATS

1. Know Your Price and Stick to It: You should know your price based on your comprehensive research before the auction. Nobody should be able to influence you to up the price. In fact, there might be some seller's strawmen seeking to make an emotional scene or up the ante. You should not budge.

2. Understand What "As Is" Means: This is very important you understand you purchase the house "as is". This means the seller does not guarantee the situation of the house or make promises to repair the house. You are responsible for all such costs and troubles.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business , Rea l Estate and Enter tainment Law. Doron Can Be Reached at: 310-651-3065. For More Information,Please, Visit: Here.