Jeff Adams – Real Estate Auctions

Real estate auctions occur because of a variety of reasons.  Mainly they are a direct fall-out of default on mortgage loans. When a borrower against property mortgage is unable to repay in agreed installments the principal and interest of the loan amount, the lender exercises his right to acquire the mortgaged property which is known as foreclosure.

The lending institutions usually do not want to be encumbered with the bother of real estate business by holding the foreclosed property.  Their objective is to set off the bad debt by raising whatever recoverable amount by the sale of foreclosed property in auctions.  Real estate auctions are usually handled by professional auctioneers.

Loans against Real Estate Investment
Investing in real estate requires huge funds far beyond the regular income and savings of an ordinary fixed salary earner or a self-employed small businessman/craftsman. It is not practical to wait until sufficient funds are accumulated because of immediate need and constant escalation of real estate prices.

Fortunately, various types of loans are available against the mortgage of property bought.  These are:

  • Fixed Rate Mortgage Loans, where the interest rate on the loan remains unchanged throughout the period of repayment.
  • Floating Rate Mortgage Loans, where the interest rate keeps changing in tune with the interest rate cycles of the money market.
  • Hybrid Mortgage Loans, where both the fixed rate and floating rate components are incorporated into the interest rate structure of the mortgage loans.

Currently the interest rates are at the lowest ebb of the cycle and are unlikely to fall further.  Jeff Adams, an experienced real estate investment advisor, recommends the option of fixed rate mortgage loans in the present economic scenario.

Defaults and Foreclosures
Defaults are caused by any of the several reasons such as: relocation, divorce, arrest or complete financial failure.  In these circumstances the borrower is unable or is unwilling to pay up the mortgage loan. The lender is legally entitled to confiscate the mortgaged property, against which the loan has been issued, when he realizes that there is no further chance of recovering the balance due.  This act of legal confiscation is known as foreclosure.

Auctions
Foreclosed properties usually end up in auctions.  This is the easiest way for a lender to recover a part of the outstanding dues by disposing off the property.  The lending institution usually does not have the required set up to hold the real estate property to rent it out or to sell it off at a profit after some time.

When there are no suitable bidders for a foreclosed property put up on auctions, the lending institution repossesses the property which is known as Real Estate Owned (REO). Such property is again put up on auction at a later date through professional auctioneers.

Foreclosures are often a fall out of the general deterioration of a country’s economy, when the business activities grind slower, unemployment rises and money supply with the general public becomes scarce.  Large scale foreclosures compel a lot of prized properties to show up at auction houses at discounted prices.

Types of Auctions
There are several types of real estate auctions, such as:

  • Home auctions which include foreclosed homes
  • Auctions of land, farms, ranches
  • Commercial real estate property auctions
  • Real estate auction sales by the U.S Government
  • U.S. Treasury seized real estate auctions

Online Auctions of Real Estate
These days the online auctions have come into vogue.  Besides the convenience, they target the niche segments of the society irrespective of geographical boundaries.  Anyone can participate in the real time bidding process electronically from anywhere, sitting in the comfort and convenience one’s own home or office.  There are several websites dedicated to such auctions.

Some of the big auction houses engaged in online real estate auctions are:

U.S. Dept. of Treasury Seized Real Estate Property Auctions
(www.treasury.gov/auctions/treasury/rp):

Through this website the U.S. Department of Treasury advertises and conducts auction sale of the real estate property seized by them for the violations of the federal laws.

Platinum Real Estate: This brokerage house handles primarily focuses on ultra-luxury and unique properties costing millions of dollars. It offers an online platform to buy and sell luxury properties.  The process is swift, fair and uncomplicated.

Williams & Williams specializes in commercial real estate auctions.

Auction.com is one of the leading online real estate market places conducting foreclosed home auctions in the United States.

RealtyBid.com is America’s leader in online realty auctions. They offer foreclosures, REOs and other bargain homes from the nation’s biggest lenders, builders and real estate brokerage firms.

Total transparency and complete access to information is the key to the success and proliferation of online auctions.  These make property transactions more fun, less cumbersome and cost effective to all the parties.

However the buyer should exercise proper precautions to ensure that the property on auction sale has clear title, free of any lien and is maintained in good condition.

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