Buying at Auction


#1

I’ve read through your posts, thank you for the great info! But I had a few more questions and I am hoping for some clarification. I am getting ready to bid at an auction (1st time and nervous) I ordered a preliminary title report and it’s clear other than the 1st and the 2nd mortgages. I am worried about there being other liens that are not listed. Should I be searching both of the owner’s names to make sure there are not personal liens against the home as well? Or if the preliminary title report didn’t show anything is that good enough? Should I pay to have a full title report done? Also, If the 1st loan is for 600K and the 2nd loan amount is 200K and bidding starts around the 600K range is this enough to “assume” I am buying the auction from the 1st trustee and thus the 2nd will be wiped out? Also the IRS has 120 days “redemption”…to do what? To come after the property? Me, the new owner? Also does the previous owner who was foreclosed on have a certain time of redemption where they can come up with the money and I “have” to sell the home back to them at purchase price plus interest? I am purchasing to live in the home not as an investor. Do I have more “legal rights” as opposed to an “investor?” Also, I live out of town, so if I am able to come and bid in person can I take my paperwork that I get on the courthouse steps to the county recorder to record the same day? If not, can I have someone else do this for me? Can I record in different county in CA? If I cannot be live for the auction can I have a representative record for me as well as start the eviction process?
Sorry for the barrage of questions but I’ve turned into nervous Nelly! :slight_smile:


#2

Oops one major point I didn’t put in my above note…the 1st and 2nd are from the same bank but currently opening bid is set just a little over 1st. I realize that this is just an estimate and no weight can be put into this number, but the 2nd is a line of credit. So on auction day if the opening bid is just a little over the 1st loan amount does that mean that the 2nd is either non existant (they didn’t use the line of credit) or was wiped out? That doesn’t seem possible if 1st and 2nd are from same bank…I’ve seen the preliminary title report with copies of the loan docs and it’s the same bank and the 2nd is the line of credit? Any help is MUCH appreciated, THANKS!!!


#3

First we highly recommend that you watch the video that Sean O’Toole the Founder of ForeclosureRadar has posted to his Blog. This will show you what happens at a trustee sale.http://www.foreclosuretruth.com/blog/sean/video-foreclosure-auction-guide/.
It sounds like you are doing the right research. You want to make sure that you are bidding on the first mortgage. It doesn’t matter if they are from the same bank. The Notice of Default will reference which loan is foreclosing. Check the Notice of Default and the corresponding Deed of Trust to make sure you know which loan you are bidding on.
When you say that the bid amount is slightly higher than the loan amount we believe you are referring to the published bid which is the amount that appears on the Notice of Trustee Sale. The actual opening bid by the bank may be different than the published bid.
If you are the winning bidder you will give your money to the auctioneer and he will give you a receipt. The trustee will then prepare the trustees deed and send it to you to record. Provided you record it within 15 days the effective date of the transfer will be the sale date. You will need to record the trustees deed in the county where the property is located.
If there is an IRS lien then the IRS has a 120 day redemption period. This would prevent you from reselling the property for 120 days. It is rare that the IRS would redeem the property but it can happen which would just mean they would return your money to you and take ownership of the property for that amount. You could hire someone to handle the eviction or negotiate the cash for keys with the current occupants.
Buying properties at trustee sale is a high risk way of purchasing real estate. There is no title insurance, no inspection and not guarantees. As Sean states in his Foreclosure Truths “sometimes the best deal is the one you didn’t buy”. At the end of the day sometimes it is best to be safe than sorry. Good luck.


#4

When I actually make a successful winning bid on a property, what happens next?
How do I take physical possetio0n of the property? No keys have changed hands, so if it?s not occupied and locked, when am I legally entitled to have a locksmith open it up and change the locks?

Thanks,
Dan


#5

If the property is occupied you will need to make contact with the occupant to determine if they are an owner or a renter. You would then need to negotiate their exit or determine if you will need to evict them.
If the property is vacant you can immediately gain entry and change the locks. The trustee will send you a Trustees Deed for you to record at the count recorders office.


#6

I am planing to bet on a property that I was going to purchase as a short sale, but know the place is truste sale. I ordered the prelimenray title report. I do not know how to find about IRS liens to the previous owner.
My understanding is that the previous ownner IRS tax liens can come over me and I will be responsible? Is that true?


#7

If you paid for a preliminary title report then the title officer should have done a name search to look for any IRS liens.
The IRS has a 120 day redemption after the trustee sale. This would mean that you would not be able to sell the property for 120 days. If the IRS does not redeem the property then the lien would typically be wiped out.