Foreclosure in 75082>Question Details

Ps44, Home Buyer in 75082

At a trustees auction in Collin Country how much cash do you need at the auction and when do you need the balance ?

Asked by Ps44, 75082 Fri Dec 25, 2009

What happens if the house has a second mortage against it but the auction is brought by the first mortgage owner ? What "other" obligations or liabilities do you pick up with buying a foreclosed house at a Trustees auction ?

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Helen Karuba, ABR, SFR’s answer
Buying "off the courthouse steps" is very risky business. here are just a few of the pit falls:
1. You do not get to go in the house prior to purchase
2. You will not get a title insurance policy
3. Any liens against the property go with the property ie..federal tax liens, second mortgages etc (answer your question owe the second)
4. You do not get an option period
5. You must pay the full amount at auction
6. You get it warts and all and condition is often a factor in auction

In other words, you are buying blind folded. Investors that purchase at auction are expiernced and willing to take the risk. They also have the resources to check potential title issues as well as additional liens.

Here's the kicker, just because you are buying at auction does not mean you are getting a good deal. Banks are trying to recoup their debt. Often you can get a better deal by letting the lender buy the loan back and buying it from them. That way you will get title policy etc. and the things that protect a buyer and the property is sold at market value.

Having said all of that, Sheriff's sales are the second Tuesday of the month, every month. Does not matter what holiday it may fall on. Best of luck if you decide to go this route. If I can help at all give me a call.

Helen Karuba
1 vote Thank Flag Link Fri Dec 25, 2009
Since the trustee auctions (foreclosure auctions) are held monthly on the first Tuesday simultaneously all over the state of Texas, it is hard to attend more than one to see how they run. You might be able to run between McKinney and Dallas or Fort Worth and Denton, but it's hard.

The trustee sale must occur within the 4-hour window they specified in the Notice of Trustee Sale. You just don't know exactly when the trustee will show up.

You must bring good funds, meaning money order, cashier checks, cash, etc. for the full amount you intend to bid. If you think the maximum bid will be $150,000 and you want to be able to bid $160,000, then bring the checks in a $100,000 check, a $20,000, a couple of $10,000 checks and so on, totalling the maximum bid you intend to place. You then sign over the checks to the trustee if you win, but only those that total up to your bid. If you don't have the exact amount, but are over, the difference will be refunded to you later.

No, you don't bid and then go get a mortgage loan. You don't even have time to drive to the bank. You must present your payment immediately.

The bank always enters a bid equal to the balance owed, but some banks have a low and a high bid, where they are trying to recoup other costs, for example, for interest or the second lien, too. You can investigate the county records to see how much was originally loaned and guess what the balance is.

Suppose you do have the high bid and present the bid amount or more to the trustee, what happens next and what are you on the hook for?
You get a receipt for your payment from the trustee and a few days later you get a trustee deed, giving you title to the property.

However, the property may come encumbered by superior liens. Any lienholder can foreclose, but the superior liens remain in place, while the junior liens are wiped out. Tax liens are always superior. They come on top of the mortgage lien, despite that fact that tax liens are filed sequentially after the mortgage. Also, be very careful that you are bidding on the first lien. Second lienholders can and do foreclose. HOAs foreclose, too. The first lien is normally superior to all except taxes, and foreclosure wipes out the junior liens.

So, you have title with a tax lien in place. You have to check county for the amount of delinquent taxes or unpaid taxes to know what you're going to have to pay on top of your cashier checks.

You then have the problem, possibly, of evicting the previous owners from the house.

My suggestion is to attend an auction to see the mechanics of it and then find your funds for the next auction. You'll need to research any properties you're interested in to see what taxes are owed, plus you'll want to drive by the properties to see their external appearance. Don't count on any cooperation from the current owner to see inside. In the old days that was the time to submit a short sale offer and it had a chance of closing before foreclosure. Not so much, now.
0 votes Thank Flag Link Sat Jan 2, 2010
If you purchase the house or if it is gifted from owner in the event there is no mortgage before house goes to auction and do a deed change does the lien still follow new owner? Is there a way to beat them to the finish line?
Flag Sat Jan 10, 2015
All auctions have their different rules and regulations purchase any home. You need to review that information from whoever conducting auction.

One of the top ten questions I am asked monthly how a family made a huge mistake purchased a home via an auction and lost $1000's

Direct Link read many articles I have published click on link for Dallas Auctions

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0 votes Thank Flag Link Sun Dec 27, 2009
If you already know the address of the home you are considering, you can do A LOT of homework before the auction day. You can have title pulled to find out what liens are on the house, second mortgages, tax liens etc.

Most of the time the home is vacant but if it's occupied, for a couple hundred dollars, the occupants may let you inspect it but remember that they can destroy it by the time you take possession.

Bring a lawn chair, your cashier's checks and get ready for a long wait...

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0 votes Thank Flag Link Fri Dec 25, 2009
1. All cash or cashier's checks at time of winning bid. Never attended auction where you were given time to get funds after your either have the funds in hand or don't bid. I've always found trustee requires funds immediately or home will be re-auctioned.

2. Second liens are wiped out by foreclosure.

3. You're buying AS-IS, WHERE IS and you get a trustee's deed in about 30 days. No inspections, no guarantees of any sort. If the home is still occupied after your purchase, it's your problem.

4. Some liens can survive the foreclosure. If that's the case on a home you purchase, again, it's your problem.
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0 votes Thank Flag Link Fri Dec 25, 2009
Typically the best investors take a variety of cashiers checks with them. Perhaps several in $10,000 increments, some in $5000, and some in $1000. Then you can get close to your purchase price. You can pay up most of the balance and then ask the trustee to give you an hour or two to get the balance.

You need to check title before you buy. Some liens don't go away if 1st forecloses. Federal tax liens for example don't go away likely. City liens, tax liens, and some others don't get wiped out and you could be obligated to them. 2nd mortgage lien for pools, etc should go away.

You may also get a tenant you don't know about and may also have to go through eviction proceeding if someone is still in the house. You could also get a tenant through the end of their lease depending on when the lease was executed.

Most 1sts are bought back by the original or secondary lender at trustee sale.....Might be better to pick them up as an REO rather than auction. I've seen some mistakes happen before, but it is rare. The auction is a place to be very very selective.
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0 votes Thank Flag Link Fri Dec 25, 2009
Bruce Lynn, Real Estate Pro in Coppell, TX
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