Having to face foreclosure auctions in Utah is probably one of the most disheartening experiences you may go through. The financial burden of a poor credit score is one thing; but the emotional burden of seeing your dreams as a homeowner dashed as a result of circumstances beyond your control is even more humiliating.
Unfortunately, it’s a reality that you have no choice but to face head on if you are in that situation. It’s been estimated that one in every 2,540 homes in Utah went through a foreclosure process in 2017 alone. And while that number may be relatively low compared to the rest of the country, the fact that you may be part of that statistic is still a bitter pill to swallow.
It may be unpleasant; but it’s not the end of the world. It may take time, but credit scores can be rebuilt. And there’s certainly no shame in having to rent for a few years until you have your finances and life under control.
But for now, you need to focus on the immediate. Your home has already gone through pre-foreclosure. Now your bank has placed it up for public auction. Here’s what you can reasonably expect to see happen with your Utah home in foreclosure:
How Do Foreclosure Auctions Work?
Utah operates primarily as a nonjudicial foreclosure state, which means the process of foreclosure is primarily administered by a bank or lender instead of through a county court. Assuming you have not made prior arrangements explaining any extenuating circumstances, home foreclosure auction occurs upon receiving both a notice of default (typically after missing 4-6 monthly payments on a mortgage) and a public notice of intent to sell—or what’s commonly known as “an intent to sell by public auction.”
Advertisements for a foreclosure auction typically are through a newspaper listing, and are posted approximately three weeks prior to the date. During that time, you will have sixteen days in order to pay your balance in full.
Generally speaking, the listing will consist of the property address, parcel number and starting price. The starting price will vary, but it typically begins with anywhere from 10 percent to the full balance of your unpaid mortgage, a percentage of your home’s current value and a buyer’s premium—a guaranteed percentage designed to cover administrative costs.
However some banks may list a home based on the appraised investment value, which is the value generated by a property for specific use of the buyer. A common example of this would be a multi-family home which could be converted into a rental property
A bank can choose to list a notice of intent to sell by public auction as many times as it takes to find a buyer. The exception is during a right of redemption, which is a grace period administered by judicial hearings allowing a homeowner to buy back their property in instances of judicial foreclosure. And while Utah is a right of redemption state, judicial foreclosure is a less common occurrence.
Where is a foreclosure auction held?
The foreclosure auction can be held either at the site of your property or at the bank itself, although many are choosing to conduct them online for the sake of convenience. In Utah, most foreclosure auctions are held at a court house in an open public area. There are some home buyers and investors who follow public listings almost religiously, and unfortunately there is no guarantee your home won’t sell after the first auction.
It might seem contradictory, but banks frequently bid on the very property they’ve foreclosed upon. There’s an interesting rationale behind this. The most obvious would be to recoup their losses. But sometimes, banks do this to write off the foreclosed property as a bad debt. After the auction, they can put the property back on their books as an asset for the amount they paid for. If this seems disingenuous, it’s perfectly legal.
Properties at foreclosure auctions are sold “as is” and there’s an old adage among realtors: “the way it looks on the outside is the way it will look on the inside.” Some distressed homeowners have taken this to heart, and go to almost extreme lengths to make their property look as unattractive as possible in order to stave off potential buyers. This rarely works, however. It might scare off first time home buyers; but house flippers and investors know that since they’re buying a home at a fraction of its value, the potential resale will frequently offset the cost of renovation.
According to Utah code, you can continue to live on your property up until the date of the auction. Considering that the average foreclosure process takes approximately 120 days (and in Utah, the average is actually considerably longer,) that should give you sufficient time to find suitable lodging—even if only temporary. However, once a property is sold at an auction, you are legally required to vacate the premises. Failure to do so will result in a notice of eviction, which can not only initiate criminal proceedings but cause irreparable damage to both your credit history and your ability to borrow money in the future (and frequently, your ability to even rent property.)
How To Avoid Foreclosure Auction Proceedings
The easiest option is the most obvious: to pay off the balance of your mortgage. However, you’re likely in default for specific financial reasons and this likely will not be a viable option for many (especially considering most banks will add exorbitant late fees in addition to balance payment in full.)
Selling your home is another option, assuming your bank has not already claimed the property. The length of time it takes to go through a realtor may not afford you sufficient time to pay off the balance in full, however; much less the cost of necessary renovations and inspections. One alternative is to contact a home buying company like us here at GaryBuysHouses. Not only is approval guaranteed (typically within a matter of hours to a day) regardless of the condition of your home, but there are some that can actually arrange for you to lease back your home in certain instances. Because we handle all necessary legal responsibilities for deeds, inspections and property titles, there’s no need to go through endless paperwork with attorneys and title administrators.
Some people have found it beneficial to physically attend a separate auction prior to the public sale of their home. To witness it in person can help alleviate some of the uncertainty that results from foreclosure. It’s certainly not a respite, but you may find it reassuring.
Above all, try to keep in mind that the loss of your home isn’t necessarily as much of a loss as you might imagine. While you may no longer have a dream home, you’re also free of monthly payments to a bank. And while you may be saddled with reduced credit and limited borrowing capacity, you’re gifted with something entirely unexpected—a chance to start over.