Buying a property at a foreclosure auction – are you tough enough?

Bankrate.com has a wonderful article, “Hassles of buying foreclosures at auction,” written by Clark Palmer.

We get calls from time to time from prospective foreclosure property bidders who just can’t pass up a bargain. The article will set you straight.

Highlights:

• The process has plenty of snags to snare the unwary foreclosure buyer.
• The condition of a foreclosed home is a mystery; it could be plumbing-free.
• Consider the time and expense of repairing a handyman's special.

“

An expert's single word of advice for folks who dream of buying a foreclosed house at auction: Don't.”

"’I caution anyone who isn't in the (real estate) business: Buying (at auction) can be one of the worst decisions you'll ever make," says Jim Hamilton, a Realtor in Los Gatos, Calif. Another bit of counsel from Hamilton: If you want to buy foreclosures at auction, plan on making that your full-time job.”

If you consider that “buying a house is like navigating an obstacle course, then buying a foreclosure is like crossing a minefield.”

Traps for the unwary.

First of all, you have to pay cash.

“And you're paying for all of the loans, back interest, taxes and attorney's fees on the property. So if the house is worth $300,000, the opening bid could actually be $400,000. By the time you outbid everyone, you could be paying a lot more than that.”

If the homeowner files bankruptcy on the day of the auction, or, in New Jersey, within 10 days of the sale, you won’t get your deed and will have to wait for return of your deposit.

A perfect house for stargazers. Even if you work out those issues, you don't know the condition of the property.

People could still be living there. The house could be gutted -- missing copper and plumbing fixtures, or even roofless, Weintraub says.

Finally, “the bank isn't going to tell you all that much about the house.” Inspect on your own if you can.

And, if you find them, who will fix the problems?

Ask yourself if you have the money, time, patience and support from the people around you to repair any problems with the house. "You need to be realistic about those questions. If the answers to any of those questions is 'no,' this probably isn't the house you're looking for," Hamilton says.

Read the full article.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com