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Advantages of court auction

●Prices are lower than the market prices.
Generally auctioned properties are about thirty percent lower in price than even pre-owned non-auctioned properties. Properties themselves are not any different, but the terms and conditions of transactions differ from general transactions, which is a big factor in lowering the price. The fact that a buyer must negotiate with possessors of the acquired property, and that the buyer must bear the costs of service fees in arrears and of refurbishing, are important.

●Procedure is fair and simple.
Anybody whether individual or company may bid and purchase a property in the court auction. Homebuyers can also bid. And the process is easier than generally thought. Information regarding the asset may be obtained from the three core court documents about the property, the description, the research report, and the appraisal report.

Risks associated with court auctions

Risks associated with buying foreclosed properties through the court auctions include not being able to see the inside of property until vacated, not having enough time to study the property, not being able to win the bid easily and to take possession of the property easily after acquiring the property.

●Nobody can explain or answer questions about the property.
Unlike in regular acquisition of real estate, in an auction, there are not any agents to explain or answer your questions about the property. Even when you find something about the property actually different from what was described on the research report of the court after winning the bid, you cannot cancel the bid. To mitigate such risks, it would be wise to consult realtors with specialized knowledge about the foreclosure auctions.

●You can't see the inside of building.
Usually there are people occupying the premise while the auction process moves ahead. And when there are occupants, you generally cannot see the interior or how the property is maintained. You may however check the exterior of the property, the surrounding conditions, or talk to the neighbors. There are also photographs and layout drawings in the Tri-set documents provided by the court, which give you a rough idea.

●You need cash to bid and to buy the property.
Payments for the guarantee, the earnest money deposit, and for the sale must be made each in a lump sum: the guarantee is allocated toward the sale. You may or may not qualify for a bank loan, so it would be wise to consult an FKR agent beforehand.

●Negotiating eviction may be difficult.
In some cases a buyer must negotiate with occupants for evictions, which may be cumbersome and troublesome, so it may be better to consult an agent specialized in auctioned assets.

●No warranty agaist defect
In an ordinary real estate transaction, a buyer may be legally entitled to seek damage or compensation from the seller for defects in the property sold, under certain conditions. In a court auction sale, however, a buyer cannot seek damage nor cancel the sale even when there are defects in the property sold. One way to look at this may be that auctioned properties are priced at discount for the higher risks.

Anybody can bid and buy.

Anyone whether an individual or a company may bid and buy a property in the court auction. Laws have been revised to lower hurdles to the auctions. Yet a prospective buyer must spend time researching the property, go to the court on weekdays for bidding and other procedures. And the buyer must take responsibility in negotiating evictions, so an average individual may feel it too difficult. For comfort it may be wise to consult a specialized agent.

Can not cancel a bid

You cannot cancel your bid. Once you win the bid, your guarantee, the earnest money deposit, is automatically applied to the payment; so you cannot get it back. Before you bid, you must thoroughly prepare for the bid, researching and securing the fund.