Preparing for a Foreclosure Auction

Have you ever wondered how the foreclosure process works in Georgia?  Kim and I started bidding at foreclosure auctions back in 1995.  From then to now, we’ve bought a lot of foreclosure properties.  More importantly, we’ve learned which properties NOT to buy!

In Georgia, the foreclosure auction is held on the first Tuesday of each month in front of each county’s courthouse.  Georgia Code says the auction is to be held “before the courthouse doors.”  Since there are usually steps leading up to the courthouse doors, we use the term “bidding on the steps.”

If a property is in Bartow County and is being foreclosed on, it will be auctioned in front of the Bartow Courthouse.   If the property is in Gordon County, then it will be auctioned in front of the Gordon Courthouse.

For a property to be auctioned (a.k.a. cried), the borrower must be in violation of the Security Deed they gave the lender.  In addition, the property must be advertised in the legal section of the county’s paper of record for four consecutive weeks before the auction.  To find your county’s paper of record, call the Clerk of Courts.

When the foreclosure ads are first published for the following month’s auction, we get the paper, take the important information listed in each ad and transfer that information to our Foreclosure Form.  (NOTE: If you email me, I’ll be happy to send you a copy of our Foreclosure Form.)

After filling out the forms, we drive by the properties that are in the paper.  At the property, we take a picture of the house, write down a description, estimate the rehab cost and determine the top offer price we are willing to pay if the property is auctioned.

Each month, we identify between three and ten target properties.  At these properties, we do our best to meet with the owners.  If the house is vacant – which happens a lot – we inspect the property both inside and out.   One of our rules is to not bid on properties that we haven’t thoroughly inspected.

Back at the office, we do a full look-up for each target property.  This means looking at the property records recorded in the county’s Deeds Room.  This enables us to know who owns the property, how many loans and liens are against the property, whether the property taxes are current, etc.

The day before the auction, we pick up certified funds from our private-money lenders.  This is how we pay for a property if we are the high bidder.  NOTE: If you buy at the foreclosure auction, you must pay for the property in full with either cash or certified funds.

On the day of the auction, when a crier finishes crying one of our target properties, she sets the opening bid.  Then everyone interested in buying the property begins bidding.  The highest bidder becomes the new owner of the property.

If we are the high bidder, we immediately call our insurance agent and get insurance on the property.  If the house is occupied, our next stop is to file a Dispossessory at Magistrate Court.  Finally, we drive to the property, and if the previous owner is still there, we make arrangements to take possession of the property.  This is a very careful negotiation.

Next week, we’ll discuss whether there’s money to be made at a foreclosure auction.

Bill & Kim Cook are a husband and wife real estate investing team. They live in Adairsville, Georgia and have been investing in real estate since 1995. They specialize in buying single-family homes, mobile homes and mobile home parks. They also run North Georgia REIA and teach folks how to successfully invest in real estate.