Utah Real Estate Auctions 101
Utah foreclosures and real estate auctions usually go hand in hand. When a lender forecloses on a home, there's a good chance the home will eventually reach the auction stage and go up for public sale.
Note: If you are a homeowner facing possible foreclosure, you obviously want to avoid having your home foreclosed upon and auctioned off to the public. So if you fall into this category, please see our page that explains how to avoid Utah foreclosure altogether, or contact me for assistance.
This guide to real estate auctions in Utah will give you a better understanding of how the basic auction process works. Let's start with the events that normally take place leading up to a Utah real estate auction:
Leading Up to the Auction
From a legal standpoint, there are basically two types of foreclosures in Utah -- the judicial foreclosure (also known as "in-court" foreclosure) and the non-judicial foreclosure (referred to as an "out-of-court" process). In Utah, most real estate foreclosures are non-judicial / out-of-court procedures.
The overall foreclosure process on a home can take about five months. It is a lengthy process for several reasons. One reason is to give the homeowner a chance to avoid foreclosure through reinstatement, refinancing, repayment, etc. There's also a high-priced item involved with foreclosure (the home itself), so as you would imagine there is a lot of paperwork and legal requirements at every step of the process.
During the pre-foreclosure stage, the homeowners have several options to prevent the actual foreclosure of their home. As a Utah real estate agent specializing in foreclosure, this is one of the services I provide to homeowners -- helping them to avoid foreclosure by way of the "short sale" and other useful techniques.
Sometimes, however, the homeowners simply cannot afford their home anymore. In these unfortunate situations, the lender will foreclose on the home and the property will start down the path to a real estate auction / public sale.
Announcement of a Utah Real Estate Auction
After a lender files a notice of default against a homeowner (meaning that the homeowner is no longer making mortgage payments), there is typically a three-month period leading up to the notification of real estate auction.
As mentioned above, the homeowner can try to rectify the situation to avoid foreclosure and public auction altogether. If that does not happen, then the home will typically move into the Utah real estate auction phase. After the three-month process, and normally at least 20 days before the date of auction, a notice of sale will be posted in view of the public. The lender obviously wants to get the word out as much as possible, because a better turnout at the real estate auction increases the chance for a quick sale.
Remember, lenders are not in the business of managing and selling real estate. So they want to sell the home as quickly as possible, while recouping the amount owed on the mortgage. The first step to achieving this is to get the word out about the forthcoming auction sale. So the lender will put a sign on the property to announce the auction, publish a notification in the newspaper, etc.
In most cases, the public auction for the foreclosure sale will take place at the county courthouse, within the county where the foreclosed home is located. As with any other type of auction, the property will go to the highest bidder. Profits made from the sale (above and beyond what is owed to the lender) will typically go toward paying off lien holders, if there are any, and to the original borrower.
After the real estate auction, a Trustee's Deed will be prepared and presented to the successful bidder. This completes the transfer of ownership from the lender to the new owner.
Questions or Comments?
Obviously, this is a somewhat simplified analysis of the real estate auction process in Utah. The purpose of this tutorial is not to make you an expert in Utah real estate law, but to help you understand how the basic auction process works in this state. If you have specific questions about public auctions, home foreclosures, or anything else related to these topics, please contact me.
