Houses in Kentucky that are slow to find a buyer or have remained on the market unsold for a long period of time are suddenly selling faster at foreclosure auctions.
Industry experts explained that potential buyers bid on foreclosure properties and once they won the bidding, a contract will be made immediately and the deal will be closed less than two months later.
However, things are not as simple as they seem. A foreclosure auction will be advertised with low starting bids such as $129,000 for a property worth $400,000 or a low $500 for a house valued at $102,000.
But industry experts said that the advertised starting bids are usually misleading and part of the sales strategy. They said that there is a buyer's reserve which was not traditionally advertised. This means that there is a starting bid that owners of the properties, usually the banks, want bidders to meet. In case the highest bidder does not meet the price, banks have the option to reject or accept the bid.
The process involves finding the highest bidder in an auction without giving up the property if the bid is not high enough. Experts said that the process works in favor of banks. But still, there are many good deals to have in foreclosure auctions. All it takes to get a good deal is to come to the foreclosure sale armed with knowledge of the process. Experts said that buyers should do their homework first before they start bidding.
Meanwhile, potential buyers are given an opportunity to inspect the foreclosure properties before the auction during open houses. Industry experts recommend that potential buyers should take advantage of this opportunity so that they will have a first-hand look of what they are getting into, that the property is worth every cent that they are going to pay.
On the other hand, experts said that potential buyers should always keep in mind the buyer's premium usually included on every sale. In some auctions, the premium is 5 percent of the total purchase price or it could be higher. Another tip to potential buyers at foreclosure auctions is to determine the amount that they are going to spend and stick on the budget no matter what.
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