In yesterdays article you learned a lot about what happens at foreclosure auction. What kinds of things you need to do before actually attending the auction and what exactly the process is at the auction. Today you will learn about what happens after you obtain the property that you won at the auction and what happens to the original homeowner that was foreclosed on.
After The Purchaser Obtains the Property
To recap: after the bidder wins the property they have approximately 30 days to get the money to the lender and take of the title. At this time the owner of the new property can do whatever they want with the property. They can move into it or try and flip it on the market and possible make some money on it.
How The Purchasers Money Is Distributed
The money paid by the purchaser is usually distributed by what ever is the highest priority. Usually it will go to the taxes, then the mortgage and possible the second or third mortgage if needed. If there is any money left at the end it will be paid to lien holders and creditors. There is hardly every money let over after all the debts are paid, but if there were, it would go the former homeowner.
What happens to the original Owner
If you are the original owner of the house you may consider attending the auction, so you can bid on your home and try and buy it back. This is legal as long as you have the deposit required to put down on the home. Keep in mind that if you do bid on the home that the deposit is not refundable and the deposit assumes that you will be able to finance the remaining balance within the 30-day grace period.
Old Debts
If you are the homeowner and you buy back the property, old debts may merge and become reinstated. For instance a second and third mortgages that became void when the first mortgage was foreclosed on. The only way those wouldn’t be applicable is if you had filed bankruptcy and they were discharged. Either way make sure if you are buying your home back, you have the money to do so.
In Conclusion
Many steps go into a foreclosure auction; the research on the property, finding out the condition of the home, the actually auction itself, gathering all the money and paying off debts. This all has to happen before you actually “won” the home. Keep in mind that if you want to bid, go to the auction prepared, there will likely be a lot of people there and everything will go very quickly. Pay close attention when the bidding starts, we all know auctioneers talk quite quickly, this is why it is important to get up front and hear what is going on. Some foreclosure auctions will be more crowded then others, this depends on the location and how many debts are attached to the property. Good luck with your bidding!
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