Foreclosure auctions are the most popular place for investors to buy foreclosed homes. With low mortgage rates these days, there is an increasing volume of homes being sold. Unfortunately for homeowners, the number of foreclosures is also rising.

If homeowners don't sell or refinance during the reinstatement period after the foreclosure is initiated, the next step is the foreclosure sale. Depending on the type of mortgage or deed of trust, foreclosure auctions might be conducted by a judge, sheriff, or trustee.

Bidding at Foreclosure Auctions
When you bid at these auctions, you should know that you are buying the property subject to any existing liens. If there is an IRS lien on the property, the IRS has 4 months after the sale to buy the property from the high bidder for the amount paid.

One advantage of buying at auctions is that any junior liens, such as second or third mortgages, or judgments, are wiped out, if the first lender is foreclosing. However, buying at foreclosure auctions also requires cash, so if you're not in a good financial position, buying at this stage is not for you.