Buying Real Estate at Foreclosure Auctions
Buying Real Estate At Foreclosure Auctions
To be successful buying land at foreclosure auctions, or more correctly Trustees Sales, you need to understand the foreclosure process. The process is long and complicated causing many to avoid them. Because of this, it is a great opportunity.
Understanding Foreclosure Process
You must understand the foreclosure process to be successful at trustees sales or foreclosure auctions. Understanding the process will help you decide the property in foreclosure, when the auction will be held and what a reasonable price is.
Finding Foreclosure Property
To buy at Trustee’s Sales you must find properties before the Trustee’s Sale. Trustee’s Sales are advertised in the paper before the sale, using a Notice of Trustees Sale. If you see the Notice the first week published you will have several weeks to research the property.
If you want more time to research you can review the Notices of Default recorded in the county recorders office. These are filed at least 3 months before a possible sale. The downside of using the Notices of Default is many of these properties will be paid and not go to Trustees Sale.
Know Property Value
You should know the approximate property value. The amount owed on foreclosure property is often higher than the properties value. If the amount owed is more than the property value – STOP! Don’t spend anymore time on this property.
Know Amount Owed
Before attending you should know the amount owed on the land. The first bid is made in behalf of the lender and will usually be for the total amount owed. If the amount owed is more than the property value there is no need to attend the sale. You don’t want to pay a premium for foreclosure property.
In a market of declining property values many of the properties at foreclosure auctions will be worth less than the amount owed. Be careful and don’t pay more that the property is worth. You may have to search many foreclosure notices to find an auction worth attending.
To find the amount owed you can call the individual or company handling the Trustees Sale. Their contact information will be in the Notice of Trustees sale published in the paper. If they refuse to give you the amount you can get a copy of the Trust Deed from the courthouse. You can estimate the amount by looking at the age and amount on the Trust Deed.
Research The Property
After you have found promising foreclosure candidates you should have a title search performed on the property. Unlike a standard purchase there is no title insurance on trustees sales so it is possible to buy land with title problems, or unpaid liens and mortgages.
Attending The Auction
If you find a property, at a good price, with no title problems nor outstanding liens, attend the auction ready to comply with the instructions in the Notice of Trustee’s Sale. This often includes certified funds at the time of auction for part or all of the bid price. Usually you must have a set amount at the auction and the rest within 24 hours.
The auction is handled like any other auction. Bids are taken and the high bid will win the property, subject to meeting the conditions in the Notice of Trustees Sale.
Buying property at foreclosure auctions is more difficult than many other methods. Because of this most people avoid them. This makes it possible to find excellent deals. It just takes work and preparation.