Homes on auction in Durban
The two main types of property auctions are foreclosure auctions and tax lien auctions. Before a property reaches auction, several things need to happen. First, the homeowner doesn’t pay his mortgage for several months. Then, the bank files a notice of default with the county recorder. If the homeowner doesn’t pay the balance owed or renegotiate the loan with the lender, the home can be put up for auction. The amount of time it takes from when the homeowner stops paying the mortgage to when the home actually ends up at auction varies, but can be anywhere from a few months to a year or more.
The other way a home ends up at auction is when the owner doesn’t pay property taxes or becomes severely delinquent on state or local income taxes. In these cases, it is the unpaid tax authority that seizes the property. When they seize the property it means that they repossess the home due to the owner not paying his mortgage against his home.
Auctions take place at local government courthouses and other locations chosen by auction companies, such as hotel conference rooms. Homes are also auctioned online. Foreclosure auctions are held by bank-hired trustees. Tax lien auctions are conducted by local sheriffs.
There are two types of property auctions. In a subject to lender confirmation auction, the lender doesn’t have to accept your offer even if you are the highest bidder. In an absolute auction, the winning bid gets the property. The starting price of the auction may be the balance remaining on the mortgage, or may be a lower amount designed to spur bidding. In the case of a foreclosure auction, the lender is not allowed to profit from the auction. Often, these properties are sold at a loss, but if there is a profit, it is supposed to go the homeowner after the mortgage and any other liens are paid.
For more on auctions read: Auctions in Cape Town