Home Buying in Chicago>Question Details

Venjon_2000, Home Buyer in Chicago, IL

Is it risky to buy foreclosed property at an auction?

Asked by Venjon_2000, Chicago, IL Mon Jan 14, 2013


I am considering bidding on a foreclosed property at an auction. I did an initial search and it seems that all the taxes have been paid. I was wondering what are some other risks of buying a foreclosed property at an auction? I guess I am okay paying 6 months of HOA fees. Does the fact that it has been already foreclosed mean that I will get a clean title? I am going to get a report from a title insurance agency but I was hoping to get some initial thoughts. I am mostly concerned by a Lis Pendens lien that shows in the property records. However, it seems that the Lis Pendens has been recorded by the mortgage company, so I assume that they recorded the lien when they started the foreclosure procedure. However, they just foreclosed recently but the Lis Pendens is still showing in the property records. Any thoughts?

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Ivan Sagel’s answer
If you buy a property at a sheriff's auction, you are getting the mortgage lien released. The title is still subject to any number of liens.

Best of luck,

Ivan Sagel
0 votes Thank Flag Link Mon Jan 14, 2013
The people I work with at the courthouse are professionals. They view houses, comp the houses, they know down to the penny what they should bid in order to get the required return once they repair them cosmetically. It is a business, so they think like business people. I have watched homebuyers bid on a house that they get attached to and the pros will bid them up just to watch rookies pay too much for a house. It is a serious place. I suggest you go to a few auctions, see how it works. Even your question shows you doubt yourself. That is good. Words like "seems" "I'm okay" "will I get clean title" "concerned" "assume" "seems like there is a lien". My thoughts are you shouldn't buy a piece of property at an auction that you probably haven't had the opportunity to walk through? You haven't had a home inspection? Are you in the trades--can you inspect the home and know what it needs? You say the property is 6 mos arrears in HOAs, what does that tell you? That the former owner wasn't able to pay for maintainance, what else couldn't they afford that affects the home? If you really want ot buy at foreclosure the best thing you can do is start hanging around and find a professional who will help you for a percentage of the sale. It is well worth their expertise. It can be a good thing or a very bad thing. I watched a pro go over to a young couple and tell them to stop bidding on a house. She did it because she is a nice person. They ignored her. The minute they won the bid a contractor walked over with his mechanics lien. The answer to your question is yes it is risky. The people who do it week in and week out will always get the best homes at foreclosure auctions.
0 votes Thank Flag Link Mon Jan 14, 2013
Megan, thanks for the answer. The place actually seems pretty nice from the pics and I will have the opportunity to inspect it before the auction. I said that I would be okay paying 6 months of HOAs if that happens to be the case (worst case scenario) but I don't know yet if it is in arrears. Also, I am going to rent it out, so I am not attached to the property and I am going to bid up to a certain price which will be about 20% lower than the current market value. That's why I am not too worried about small expenses, but I am really worried about something big that I could be missing and that could cost me 10K+ or even the entire property.
Flag Mon Jan 14, 2013
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