Risk of Buying Homes at Auction After Foreclosure in California
Trustee sale auctions after foreclosure in California are where the property is auctioned to the highest bidder at a time and place indicated by law-required public notice. No title insurance policy for benefit of the buyer would be available.
Sometimes auction properties can be bought a a reduced price, which lures buyers hoping for risk and getting a good deal.
Possible complications when buying a home at trustee sale auction after foreclosure in California:
1. Time - When you buy property at such an auction, you wonâ€™t have time to reconsider or think much about the deal. You wonâ€™t be able to ask questions about the property at the auction and must get all information prior to that time.
2. Costs - When buying at a trustee auction sale after foreclosure in California, the buyer must deliver cash or its equivalent to the auctioneer on the spot. And some properties sold at auctions can have hidden fees and buyer premiums added to the price. So buyers must get this information and know in advance.
3. Disclosure - â€œAS ISâ€ purchases is the way it goes at trustee auctions sales, and sellers wonâ€™t provide buyers with any disclosures.
4. Crowds - Lots of people sometimes show up for these auctions and can result in confusion and too much competition for inexperienced buyers.
5. Condition of the property â€“ Some properties sold at foreclosure auctions are in bad shape and can have mold, wood and termite damage, structural and other damage. Buyers normally donâ€™t have any opportunity to inspect properties prior to the auctions.
6. Repairs - Foreclosure properties sometimes require lots of repairs to bring them up to code or minimum standards on appliances, piping, drainage, sewers, cabinets, electricity, gas, landscaping, etc.
7. Priority - Some lien holders will have priority over buyers at foreclosure auctions. Buyers must do their due diligence and hire an experienced real estate attorney to be prepared to avoid this title complication and financial risk.
8. Price - Buyers usually donâ€™t have valuation models to help determine facts of the market to understand whether any particular price is a value for the foreclosure property.
9. Possession - Prior owner or illegal squattors might occupy the property at time of foreclosure auction sale. It is imperative that buyers understand this and know the facts. If they buy property at auction, California law grants certain rights who occupy such properties, whether or not that have a valid lease or rental agreement.
10. Title Insurance - Such title insurance is standard in CA for regular equity home purchases, and it would guarantee property title in the buyer. However, when a buyer gets a property at foreclosure auction, he or she will not get any title insurance. So buyers should at least consult with an experienced real estate attorney to understand their possible risk and reward without such title insurance.
Is buying a home at a trustee auction sale after foreclosure worth the risk for you?
This is for information about buying homes at trustee auctions sales after non-judicial foreclosures in California only and is not the providing of legal services. Source of information is Equity Title Insurance.
Professional REALTORÂ® agent representation and help for property owners, home sellers, private trust estate representatives, estate administrators, executors and heirs, probate and trust attorneys, estate planners, income tax professionals, public guardians, fiduciaries, investor group managers, bankers, and individuals, with listing and sale of properties at Irvine and Orange County, CA.