I get asked the question frequently... what's one of the best ways to purchase a foreclosed home at public sale?. Well I'm not an attorney and the method is different from state to state but I can give you some normal pointers. Let me start by saying there are literally two varieties of auctions. The primary kind is the "court house steps" auction, this public sale is held before the bank takes the home back. The second sort of public sale are those you see marketed on TV, newspapers, etc. At these auctions the lender has already foreclosed on the home. Lets examine both kinds of auction.

The first type of foreclosure public sale is many times referred to as the "court house steps" auction. Now in lots of situations this sale will not be really held on the court house steps but inside the court house building or many occasions in an attorneys office. However places such as Phoenix, AZ really do have these auctions outside the court house every week. The largest threat buying at this auction is you usually haven't been in a position to examine the house and/or if you are the successful bidder chances are you'll be the one doing the eviction of the present owner. Not a very nice process. If no one hits the reserve bid this is when the lender is the winning bidder and really takes the house back. As soon as this occurs they'll promote the home in one of two ways, either via a brokerage/listing agent through the MLS or by means of a second type of auction.

The second kind of auction is the type you see marketed on TV, newspapers, radio, etc. These homes have already been taken back by the lender as in the example above. The advantage of buying property at this type of public sale is you are not performing any evictions and in most cases you'll be able to examine the property. The biggest down aspect to this is there are normally many bidders on a particular home. Many of those bidders are inexperienced and in the "heat of the second" many of those properties get bid up and purchased for greater than they are actually worth. You also need to have cash (or hard money lender which is a complete new subject).

The fundamental thing to remember when acquiring at both type of auction is do your homework. Many people go in blindly and purchase a property only to realize they did not get a superb deal. As with anything the ones who do there "due diligence" and put in the effort are the ones who get the good deals. Be aware that this process does involve a good amount of time if you want to be successful. You MUST commit the time to educating yourself when buying property at auction, if you can't, DON'T buy at auction.