Benny Kass talks about foreclosures at Inman News
I always ask myself one question: If this is such a good deal, why am I going to get it? At these foreclosure sales, there are experts (some people call them "sharks") and there are laypersons. If you really want to pursue this, you must retain counsel and get an immediate title search to determine whether there are any other liens or encumbrances other than the $580,000 mortgage.
You should also talk with the homeowners who are facing foreclosure. Perhaps they would be willing to sell the house to you if you will pay off their mortgage? Even if they are unwilling to do this, at least you will have had an opportunity to inspect the entire property. That's a must; many people buy houses sight unseen only to discover major -- and expensive -- problems after they take title.
You should also talk with the lender or its attorneys. Some lenders will be willing to cooperate and assist you in buying. Other lenders take the position that they do not have the right to do anything until after the foreclosure sale takes place.
How much should you bid? That depends on two factors: the value of the house and your pocketbook. There is no real standard bidding practice. The lender will probably set the initial bid. They may require bids at certain dollar increments -- say $1,000. Start at the opening bid and go up to your limit.
You must set a limit on how much you are prepared to spend. There is what I call the "auction mentality" whereby people think they are getting a bargain even though they overpay the value of the auctioned property.
You should also determine -- in advance of the sale -- approximately how much it will cost you to repair and correct all of the problems (including the mold).
The bottom line: Buying at a foreclosure is risky, despite what those so-called "experts" write about in their sales-promotional books.