Before even answering, my suggestion is that you find and hire a great Realtor to assist you. We can't represent you at Trustee Sales--there, you're on your own--but a good Realtor can help you wade through all of the information and give you guidance so that you don't do something that will cause you thousands of dollars of regret.
First, buying in a Trustee Sale means that only that one lien holder's debt is satisfied. If there are other liens (a second mortgage, a third mortgage, a trash bill, a utility bill, unpaid income taxes, etc), you'll have "bought" all of those expenses too. In other words, the debts that are attached to the home are NOT exonerated when you purchase a home in a trustee sale.
Secondly, you don't get to inspect the home to determine the condition and if it's falling down, has permit violations for illegal extensions and repairs, etc., you'll not be able to "give the home back" for your money if you're dissatisfied. You buy the home and all of its attendant problems when you purchase a home at a trustee sale.
Finally, and this is the one that usually stops most people--you must pay ALL CASH for a home purchased in a trustee sale. Individuals who buy homes this way, must have certified checks to pay for the purchase directly after bidding successfully. This is not typically a problem for those who have a lot of disposable income, but it can be crippling for a new buyer or first time home buyer, so I would strongly recommend against trying to buy a home this way.
And remember, if the deal seems "too good" to be true, it usually is.
Area Pro Realty-People's Choice
When you buy at a trustee sale by bidding on the first trust deed, you are taking the risk that the property has been trashed. Before bidding, drive by the property and see if it is occupied. Hire a realtor to do a title search on the property to determine who the owner is. Let him research to determine if there are any tax liens on the property. If you buy the property, you will have to pay off the tax liens. Does the owner reside in the property? Will the occupant of the property let you in to see it? Are you willing to pay the occupant up to $100 to be let in and view the property?
All these techniques give you a way of estimating the risk of repairs and estimating their cost. If you have no way to do these things, you, as Mr. Butterfield stated, have an opportunity to lose money. To reduce that opportunity, determine what the house would be worth fixed up and ready to rent or move into, then subtract an estimate of repairs and liens. Don't bid over that net amount.
I can do the research I mention for $75.00/'hour, but may need to hire a private eye to background the owner to discover any tax liens not yet recorded at the county. This would be another $200.00 paid to him. Estimating repairs should be done by a contractor, which you won't, most likely, be able to bring to the property, so you may need to surreptitiously film the home as you walk through it and show the films to the contractor. Or take really good notes the moment you walk out of the building and go over them with the contractor.
Call me at 408-639-0211 if you want to discuss this further.
I can't tell you what you should do, other than do your homework and be very very careful.
Yes I think that you are very wise to engage a REALTOR with the experience and formal education, of Mitchell Pierce. This is especially true where you want to bid on the 1st mortgage at a trustee sale.
This is a transaction that requires a great deal of knowledge and experience if you are to be successful AND PROFITABLE.
If you do not have a great deal of recent, successful experience doing this, you definitely want to hire someone like Mitchell Pierce to represent you,
If you do not have a great deal of successful experience with trustee's sales, in my opinion, you should never bid at a trustee sale.
There are no guarantees of good title at a trustees sale,. you must pay all cash on the spot, there is no financing, there is no title insurance, and there are no refunds.
If you do not really know what you are doing at trustee's sales, you will lose a lot of money in a hurry.
Trustee's sales are not for people who have no successful experience with them.
If you attempt to buy a house or any other Real Estate at a Trustee's Sale, unless you really know what you are doing you will lose a large amount of money very quickly.
Remember there are no guarantees and there are no refunds at trustee sales.
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: firstname.lastname@example.org