I've a bit of experience in purchasing auction property. As stated above, there are many different types of auctions to consider. Here's a couple of my blog posts over on Quora:
The real deal is that BEFORE a property is foreclosed it must go to a public auction to
determine the Fair Market Value (FMV) and that's a Federal law passed by our
congress just after the Great Depression. With a little research you can find where
public notices of things like bankruptcies and other legal facts are published and
viola, you’LL find them listed there with the dates, opening bids and the trustee
name who will share some basic info with you prior to the sale. Now you may not
get to look inside but hopefully you'll be saving enough to make up for it. Next you'll
need to investigate the title for liens because some of the more pesky ones from the
governments usually stick around with the HOA's along for the ride. Caveat
Emptor, this is not something you should attempt without a bunch of learning and
experience first. I actually saw what I thought was an experienced buyer at one of
these sales spend over $220 grand on a worthless second mortgage, no refunds or
take backs later, cash is king and all is as is where is… Be very careful!
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The first step would be to understand at what point you want to be involved. The
pure definition of a foreclosed house would be at the point the lender on the home
needs to foreclose on the current owners to get his loan settled within the terms of
the original aggreement. The lender (or Judicial body if required) usually assigns
the task to a third party entity known as a trustee who will put the property up for a
public auction according to strict laws and regulations from the local, city, state and
federal government(s). If this is the point you want to make a purchase then you'd
best research local legal newspapers to find the postings of property going to a
trustee auction sale which usually occurs about 21 days before they put it up for
public bids. If you mean foreclosed, in the past tense or already foreclosed property,
these are the ones that nobody bought at the trustee auction so the ownership was
given to back to the lender as settlement for the debt. Usually, they (the lender) will
call an experienced Realtor who helps them get the old owners out of the house, do
the often needed rehab work, clean up the title and finally list it on the MLS as a
“foreclosed property”. Usually they are sold for the highest amount they can get to
offset the losses occurred but can often be a good buy as Banks don't like REO's
(Real Estate Owned) sitting on the financials so they tend to price them
aggressively. In any case I highly recommend you seek professional and highly
experienced help before you jump into this arena with the “bulls” waiting to come at
you. BEST LUCK
