For potential buyers, a property auction represents the chance to get a great deal on a house. For the former owner, it’s a pretty depressing event.
Auctions can happen for a few reasons (we’ll explain that later), but the bottom line is that you won’t benefit as the former owner. In other words, if you’re in trouble paying your mortgage, you want to get rid of your home before it winds up at auction.
Let’s talk about what happens during a property auction and how you can keep your home from being sold this way.
What is a Sacramento Property Auction?
A property auction happens when a group of investors, real estate professionals, and cash buyers gather to bid on a property that is no longer in the possession of an owner. They are usually buying it sight unseen (though they may be able to drive by it if the address is disclosed in advance). This happens for two main reasons:
- The home went into foreclosure. If you are unable to keep up with your mortgage payments, the bank will eventually take the property back. They may choose to sell it at auction to get an all-cash offer as soon as possible and take the property off of their books.
- The property was claimed by the government. If you owe enough money in federal back taxes, the government may seize your property, sell it, and use the profits to help settle your debt. This situation is less likely. The IRS will typically put a lien on the property, and just recoup their funds when you ultimately sell.
The buyers at auctions typically pay less than they would to buy a home on the MLS and must pay in cash immediately after their winning bid.
Will I Make Any Money From the Auction?
The short answer is: No. If your home is in auction it means that you have either lost it to foreclosure or a government seizure of assets. In the case of foreclosure, you have lost all interest in the property. The bank gets to sell it keep the funds.
If you fall behind on property taxes, your home may go to a tax sale. This is different than an auction because the bidder is buying your debt, not the home. You would still be the owner of the property but the winner of the tax sale can collect your back taxes from you — or foreclose if you don’t pay. Once again, if you ended up in foreclosure you wouldn’t be able to take any money from the sale.
How Do I Avoid Sending My Home to Auction?
It’s along road from your first late mortgage payment until your home winds up on the auction block. In most cases you can avoid seeing your address listed in a Sacramento property auction if you address your financial situation sooner than later. You have several options:
- Talk to the bank about a short sale. If you own more on the home than it’s worth, your bank may agree to this type of sale, where the price falls short of the outstanding mortgage. You won’t walk away with any profit, but you can avoid foreclosure and the resulting credit complications.
- Sell it on the market. If you’re just a few mortgage payments behind or about to miss a property tax payment, it’s not too late to take your equity and run. Clean up your house, do some minor fixes, and list it on the MLS. When your financial situations changes drastically and you know you won’t be able to maintain the home, try to sell it before a foreclosure notice arrives.
- Sell to an investor. Maybe your home isn’t in great condition. You can still sell it before it winds up at auction! If you have any equity in the property, contact an all-cash buyer about taking your home as-is. You can get out of the property in as little as a few weeks. You’ll pay back the bank and get out with some cash to start over.
Are you trying to avoid seeing your home at auction? Contact California Family Homebuyers at 916-496-3737 today. We may be able to offer you a fast, all-cash offer for your home and close in as little as 7 days.