1) Unknown liens
2) Condition of the home
3) Back taxes
4) People living in the property and risks associated with getting them out and possible vandalizing
5) In-depth knowledge of market where property is located, value of home and trends of the market
There are full-time auction buyers who dedicate hours and hours of research to the properties and know the ins and outs. Even they purchase properties at auction that they lose money on occasionally. It is not for the feint of heart. Tread carefully.
There are other property purchase avenues with much less risk and high reward.
Best of luck,
Once the property has been foreclosed it is up to the owner (bank) to clear all liens against the property. For example, the reason you do not see bank mortgaged property sell at tax liens is because the banks make sure they continue to pay the property taxes on the property. Banks know they will get more money for the property once the bank resells the property.
Back to the point, it is not a surprise the bank has recoded a Lis Pendens on the property securing their right. The bank still needs to give you clean title to the property. Personally not having been through the auction process I would think they would have to provide the buyer with the same protections as any other buyer when it comes to title. These are questions you need to ask the company holding the auction well ahead of time.
Remember auction buyer. You are buying the property AS IS. Hopefully you will have an opportunity well before the auction to inspect the property and you or someone you know has basic knowledge of property structure. Remember anything that is wrong with the property you will be flipping the bill to repair or bring the property up to code.
Best of luck,
Manuel Brown, Broker
That you know as much as possible about the HOA and the rest of the unit owners in terms of the financial health of the building and the physical condition of the structure.
That a potential buyer in the building can get conventional financing. If they can't you need to understand you are buying a very illiquid asset.
That you have a plan for what you are going to do with it (live in, rent, flip) and know you can do this per their rules and regulations.
You have data showing the price you pay will be at, or preferably below the market value.
You are aware of any issues or repairs needed. AS IS means just that.
You are clear what you will have to pay as a net price. Many auctions have a buyer's premium you will pay as well as the bid price, and past due HOA fees, taxes and penalties.
I strongly recommend you have some guidance from someone who knows this process. Like the man told me when I was looking for my first car, " that is not a good choice, but we aren't worried, there is one for every seat".