Earlier this month my wife and I closed escrow on a house that had been offered as a short sale by the owners that were facing foreclosure from the bank. Because they had fallen behind in their mortgage payments and were feeling the mounting pressure of being evicted from the premises and the embarrassment of having a black mark on their credit rating, the former owners listed their home for sale. Had they not taken steps to sell the house before it would have been taken by the bank the former owners would have had their home foreclosed on and the property been included in one of the countys real estate auctions.

Throughout the country real estate auctions are held to sell off distressed properties that have been foreclosed on by banks and lending institutions that own the mortgage on the property. After the paperwork has been handled and the defaulted loan on the mortgage has been leveraged to discern what amount of money a property can be sold for by the bank that has possession of the home, an opening bid is established for the minimum amount of money that will be accepted by the bank from bidders attending real estate auctions. For the most part homes and land that is sold at auction is priced below current market values and savvy investors and buyers can usually pick up a bargain when dealing with property auctions that handle the foreclosed homes owned by banks.

Since the beginning of mortgages the need for real estate auctions has existed. The unfortunate need for auctions has become more and more popular among real estate investors that do not form attachments to the homes that they buy and sell and look at foreclosed properties as a practical means of increasing their income and net worth. Investing in real estate is always a good idea and many financial experts endorse the idea of buying property and holding onto it as the values in the real estate market have traditionally been on the rise. For many investors real estate auctions present opportunities for buying a home at a reduced price and renovating it before putting the home up for sale in the traditional real estate market without waiting for values to climb as traditional investors do.

For the banks that are gaining a growing number of homes through the increased number of foreclosures that are taking place across the country, real estate auctions are one of the few places that they can sell a repossessed property and gain the majority of their money back after investing it in the failed mortgage. Because the banks are offering homes at a discount below the actual values of the home the foreclosed properties often make a good investment for the people that are able to buy them at the auction. However, there is a catch when it comes to investing in real estate that is bank owned. Unlike the sellers of homes that work within the typical realm of the real estate market, the banks are not responsible for any damage done to the property by the previous owner and will not pay for the repairs or negotiate the cost of repairing any part of house that they own through a foreclosure. Therefore, the homes and property that are sold at real estate auctions are as is and whatever repairs if any are required to make a house inhabitable again is the responsibility of the investors and buyers that pick up the discounted houses at the auctions.

After picking up a home for tens of thousands of dollars below the value of the property real estate investors should have the home inspected to learn in detail what if any repairs need to be made on the home before it can be resold on the open market. While some owners that are forced into foreclosure keep their house in good repair throughout the banks proceedings there are some people that feel they are being mistreated by the banks after not paying their mortgage payments and purposely remove fixtures or do damage to a home before they are evicted from the premises. For this reason a great many of the homes listed in real estate auctions are in need of some form of repair. While most of the damages are cosmetic in nature there are some rare cases where disgruntled former owners have carelessly destroyed walls or ceilings in their effort to remove HVAC systems and lighting fixtures that they feel they are entitled to. In most cases investors that deal with large numbers of foreclosed property are prepared to make a few thousand dollars worth of repairs or renovations to a home purchased at the auction before they resell it at its current value.

When attending the real estate auctions that are open to the public there are a few things that people starting out as investors should be aware of. First off, whether looking for a home for themselves or buying a property as an investment that can be sold at a profit every buyer should be aware that the opening bids on real estate are not in the hundred dollar range as advertised on late night infomercials. The majority of homes listed in the auction are priced well below market value by anywhere from thirty to one hundred thousand dollars, depending upon the size of the home and where it is located. For average homes the savings at the auction are still substantial, however they may be only in the tens of thousands of dollars lower than comparable homes for sale on the market. The real deals that offer the highest returns on investment are the larger executive homes that range anywhere above the half a million dollar mark. These homes typically have an opening bid that is anywhere from one to seven hundred thousand dollars below their actual value depending upon what that value is. The higher the actual value of the home the greater the savings at the auction will be for investors.

The other thing that is important to be aware of when dealing with the real estate auctions is that once the auctioneer has accepted a bid there is no time to set up financing. Anyone bidding on property at the auction must already have their finances in order and pay off the full amount bid for the house within twenty-four hours of the auction closing. With a cashiers check for the deposit during the auction, investors winning the highest bid can secure the property but must have all additional funds at their disposal at the time they attend any of the real estate auctions. For people that have the resources to attend and bid on distressed bank owned properties the real estate auctions are the best place to pick up houses that can be resold for a profit with a little repair and maintenance.