©smarrt - flickr

©smarrt – flickr

If you losing you house and it is going to a foreclosure sale, you may have several questions about the process and what exactly is going to happen.  This article is going to cover the most commonly asked questions about the foreclosure sale process and what happens at the auction.

What happens at a foreclosure auction?
Foreclosure auctions can vary a little bit, but most of them follow a standard format that looks like this:
-The auctioneer will read various legal notices and legal descriptions of property.
-The auctioneer will then start the bidding process on the property.
-If the auctioneer has not already pre-qualified bidders by asking for a deposit, they will ask for a check when a bid has been made.  In most residential auctions, deposits will be around $5,000.00
-The auctioneer will then try to raise the bidding and get others to bid higher amounts.  The increment in bidding can vary anywhere from $100.00 to $1,000.00.  This process will keep on going until it is obvious no one else is bidding.
-The auctioneer will then give the sign that the bidding will be ending by saying, “going once, going twice, going three times, sold.”  This concludes the auction.

What happens after the bidding process at the foreclosure auction and some one has won the property?
When the bidding process of the foreclosure auction has officially ended a few things will happen to conclude the process.  First, the foreclosure deed and purchase papers will be drawn up by the new purchaser and the mortgage holder.  Second, a grace period will be given to allow the purchaser to line up financing; usually it is around 30 days.  Finally, a closing will take place and the new owner will formally take the title to the property.

What usually happens to the money paid at the foreclosure auction by the new purchaser?
The money is distributed in order of priority.  First it will go to real estate taxes.  If there is any money after that, it will go to the first and second mortgage.  If there is still some money left over it will then go to any lien holders or attaching creditors.  If there is any money left over at the very end of this process it will go to the former homeowner.

I want to bid on my own property at the foreclosure auction; is this possible?
Yes, you can do this if you live in state with the right of redemption and have the required deposit money.  Keep in mind that the money is a non-refundable deposit and if you are the highest bidder, you will have 30 days to come up with the rest of the money.  Finally, some old debts may merge and become reinstated.

What happens at the auction if no one bids high enough to cover the debt I owe?
Any left over debt would be a deficiency, which, under some states, you would be responsible for as an unsecured debt.  The bank would have legal rights to pursue the debt.

What is the difference between a foreclosure and a sheriff’s sale?
A foreclosure auction will be held by a mortgage holder after default.  A sheriff’s sale would be held by a lien holder or attaching creditor after default.

My house is going to foreclosure sale; will people be coming inside the house?
Not likely. Usually, it will be in front lawn.  You can invite them inside you home, but you do not have to.  If you know your are losing the house and hoping for a high bid so there is little deficiency you will have to pay back, you may want to invite them in, if the house is in good shape.

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