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Foreclosures and trustee auctions?

Asked by Home Seeker, Los Angeles, CA Sat Feb 27, 2010

We are looking to buy a foreclosed home at auction. Are there agents, brokers, or lawyers who specialize in helping buyers through this process?

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Over the past 14 months, I've assisted 3 of my investors acquire 33 properties at the Norwalk & Pomona trustee sales. As a real estate broker, I've assisted my clients acquire & dispose the properties to other investors or to the retail market. The auction process must be carefully researched and performed otherwise the buyer may lose a lot of money. Trust me, I've see it happen. A ton of research is required for each property prior to bidding. I would advise you to perform your own due deligence or contact an agent/broker who specializes in this form of real estate for assistance. Also keep in mind that trustee sales are all cash/cashier check. No financing is available and 100% of the bidding amount must be collected after the auction. One of the benefits of buying at trustee sales vs waiting for the bank owned properties is the discounted price/percentage. Now more than ever, I'm seeing an increase of potential investors, buyers, or curious watchers attend the trustee sales to get into the action. It's no secret, a lot of money is being made daily. Keep in mind that this is a risky business if you are not well aware of the process. Take some time to do your own research and be more prepared. Attend several of the auctions to understand the bidding process. Ask questions if you are unsure of what's going on. A lot of seasoned investors may or may not assist but it doesn't hurt to try. Good luck!

Ikem Chukumerije
Broker/Owner/Notary Public
Westside Premier Estates
Brokerage | Financing | Investments
Tel: 323.350.8297 | Toll: 800.783.1421 | Fax: 310.496.0511
Email: info@wpestates.com | Web: http://www.wpestates.com
1 vote Thank Flag Link Wed Mar 10, 2010
Best deals exist in all of the various flavors of "For Sale". Steals pretty much don't exist but promoting homes in pre-foreclosure inferring availability has proven a sure way to gather the gullible and naive. There is an extraordinary amount of misinformation and disinformation available from all quarters. Your task is to separate the wheat from the chaff.
After you've grounded yourself in the issues and concerns of buying you'll have the knowledge to interview and find an agent that demonstrates the knowledge you're looking for. Expect explanation and when you do you'll have found who you're looking for.
Check out the link below for a disinterested discussion of foreclosures from Nolo Press.
0 votes Thank Flag Link Sun Feb 28, 2010
I believe you need identify what type of auction there are several different types:

1. Court house steps?
2. On line?
3. TV
4. Public location ?

These are a few examples however you need be qualified prior going to auction know exactly what you are doing it can be expensive mistakes made.

Lynn911
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sun Feb 28, 2010
Thank you everyone for such wonderful answers!!! Really great information, and much appreciated.
0 votes Thank Flag Link Sun Feb 28, 2010
My question is: Is foreclosure or pre-foreclosure buying for you?
Foreclosure investing is generally not a good investment approach for beginners. There is much to know in order to avoid the problems that can occur. If you don't know what you are doing, one disastrous foreclosure investment can wipe out your capital and your enthusiasm for home ownership in general.

There are 3 basic approaches to buying properties in foreclosure depending on the stage of the foreclosure process: buying pre-foreclosures, buying at the foreclosure auction, and buying from lender after the foreclosure sale.

REOs (lender owned after foreclosure) are the least risky way to buy foreclosures. You may have more risk than you would in a regular real estate transaction, but REOs are less risky than in buying at the foreclosure auction. Since REOs are somewhat similar to a regular sale, they can be pretty safe. The purchase will be made "as is" (no repairs) and you will not get a seller's disclosure.

The next riskiest foreclosure purchase is the pre-foreclosure. This is the current state of the property in question. A pre-foreclosure seller might be desperate and be less than candid about the condition of the property and the neighborhood. His motivation is to salvage anything he can from the property before it goes to auction.

There might be liens on the property that the seller "forgot" to mention. Any unpaid delinquent bills become the buyer's responsibility, such as taxes and utilities. There may be another person on title who did not sign the deed, and so on. In California, there are laws related to dealing with and buying a property from a homeowner occupant who is in default on a loan. Be sure to get legal advice.

If the contracts and the sale are not done according to the law, the seller has the right to rescind the sale and could, long after the sale, sue to have the sale reversed. There are extreme penalties for violating the law. Remember, "Ignorance of the law is no excuse." You need to know the state law when you buy a pre-foreclosure home.

Can the seller can legally deed the property to you? What if the seller is already in bankruptcy? And, even if the seller does not file bankruptcy until after your purchase, you may have to deed the property back to the seller up to three years after you bought it.

If selling the property made the seller destitute, and the seller sold for much below market value, the bankruptcy trustee can require you to deed the property into the bankruptcy estate on the grounds that the sale was a "fraudulent transfer," wherein the seller deprived his creditors of an asset which could help pay the debts.

A lot of pre-foreclosure buyers may forego some of the inspections because they are hurrying to buy before
the foreclosure auction. But, if you sign a proper sales contract with the owner, be sure to get appropriate inspections, go through an escrow with a knowledgeable Realtor and escrow agent, and look at the property yourself, you probably will not be at great risk. If you use the safeguards above, you are going to have less risk than in most auction sales.

Buying at the auction is the riskiest foreclosure purchase. At the auction you have no real estate agent to lead you through the process. You have no escrow and no title report let alone title insurance. In most areas, the transaction must be an all cash sale. You may have a week to a month to come up with the full purchase price, but if you do not raise the money, you lose your deposit.

At the auction the people conducting the sale will announce that the successful bidder will receive NO WARRANTY OF ANY KIND. You have no assurance that there are not other liens or loans on the property.
You do not have any inspections by contractors, roofers, pest inspectors, building inspections, or septic system experts. You get no disclosure from the seller as to the condition of the building or what is happening in the neighborhood. Usually you cannot see the inside of the building; perhaps not even the back of the outside. You know nothing about the electrical system, the plumbing, the heating, or air conditioning.

If you buy an occupied property, you have to do an eviction, which can drag out for a while. Sometimes the occupants, if they are former owners, will vandalize the properties before leaving.

So the question is, do you have the experience and willingness necessary to buy a foreclosure or pre-foreclosure? I am certified in all aspects of the foreclosure and short sale process, and would be happy to have a discussion with you.

Deborah Bremner
REALTOR, 00588885
Certified Short Sale Professional
Certified Home Retention Specialist
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes Thank Flag Link Sat Feb 27, 2010
Don't forget about checking for IRS liens, State Tax liens, Property Taxes which aren't wiped out in a Trustee Sale. It's better to spend a few $hundred dollars before investing $hundreds of thousands.
Web Reference: http://www.sopactitle.com
0 votes Thank Flag Link Sat Feb 27, 2010
Simple answers to complex questions don't work. http://homebuying.about.com addresses all aspects of buying including the foreclosure process and hiring agents. Bookmark it for ongoing reference.
0 votes Thank Flag Link Sat Feb 27, 2010
I agree with Nicole. If you are looking for the best deal (and lest risky) it's best to wait until the property has been foreclosed on then buy it after it comes on the market as a bank owned property. Even if you have the cash to buy directly at auction, there are no contingencies periods and you get what you get. On the other hand, all cash puts you into an advantageous position again other buyers after the property is listed plus you have inspection, loan and appraisal contingencies to protect your rights. Most times the properties sell at a LOWER price once they have been foreclosed on a relisted by the bank.
0 votes Thank Flag Link Sat Feb 27, 2010
There are Realtors who can help you secure a home at auction, however,I believe there is a common misconception that "auction" homes are the way to get the "best deals" when in fact that is not always true (banks are the owners of these foreclosed properties, and are often looking to recoup the FULL loan amt plus fees), and proper inspection of the property is often minimal. This is why many homes do not get sold during the auctions and often go back to the banks as REOs.

Auctions are not my specialty, but foreclosures are. If you need help navigating the home buying process, within your price range... Please contact me and we can talk further about your needs.

Nicole Lindler
Prudential California Realty
310.694.2288
Nicole@NicoleLindler.com
0 votes Thank Flag Link Sat Feb 27, 2010
Hello Home Seeker,

As your probably know, these purchases require all cash. I do have a company I work with that I can refer you to that will represent you at the sale and do the checking to insure the property has clear title at time of the auction and also will bid on it for you. If that seems like something you are interested in, please let me know mcarrabba@kw.com They specialize in purchasing properties at auction for clients.
They have purchased over 75 properties in the past 12 months at auction and can get through all the hoops for you.

Best,

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
mcarrabba@kw.com
(323) 899-2900
0 votes Thank Flag Link Sat Feb 27, 2010
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