Home Buying in Berkeley>Question Details

Wen, Home Buyer in Berkeley, CA

buying an auction house

Asked by Wen, Berkeley, CA Thu Dec 27, 2012

Hi, I am wondering for an auction house, does the buyer need to pay the Debt
(Unpaid Balance Fees)? for example, if i want to bid on this property, http://www.auction.com/California/residential-auction-asset/… do i need to plan to pay for the Total Estimated Debt (Unpaid Balance Fees): $1,326,540.10? Thanks a lot

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In general, it is best to avoid auction properties, unless you are very experienced with them, or working with a team that is very experienced. Most licensed realtors are not working in this arena, because it is highly specialized and very high risk, Some of those reasons are outlined by other agents below. You have to leverage a lot of cash, have to make quick decisions without the benefit of inspections, and you are bidding against usually very experienced and very aggressive investors. Some of the players in those environments are very aggressive....read shark tank. You do assume all outstanding issues on the title without the benefit of a title search if you buy on the courthouse steps.

Bottom line is: if you make a mistake, it can be a very costly one in terms of assuming costs, and legal liabilities.

Your best bet for researching this is to talk to an attorney familiar with the process, or find one of the independent services that will educate on a fee for service basis. Trulia is not the best forum for this type of discussion.
0 votes Thank Flag Link Fri Dec 28, 2012
Hi Wen:

As both Tina and Lance have indicated, no.

Here's a quick relative risk scale for distressed property (1 being the most risky):

1) Trustee Sale (court house steps)
2) Auction Company Sale (you bidding in a pressure environment)
3) REO (reduced disclosure requirements),
4) Short Sale (primarily risk is approval timeline)

1 thru 3 above have a higher probability for issues with Title, referred to a "Title Defect" or "Cloud on Title", which means you would not have clean/clear ownership - not a comforting thought. Some examples of situations affecting Title are:

-Outstanding mortgages/liens
-Restrictive covenants
-Outstanding future interests of others in the property
-Encumbrances
-Easements on the property
-Variations in the names of grantors and grantees
-Variations in the chain of title
-Outstanding dower interests.
-Adverse possession claims
-Structural encroachments
-Existing violations of equitable servitudes or covenants
-Zoning restriction violations

Here's an interesting situation I have run into:
"REOs: How Buyers Can Avoid Hidden Unsecured Property Tax Liens"
http://www.trulia.com/blog/steve_ornellas_mba_re_mastersgri/…

If you enjoy the “thrill of the deal” proceed with options 1 thru 2. If, instead, you like to know what you are getting for your money stick with ¾ and non-distressed property.

-Steve
1 vote Thank Flag Link Fri Dec 28, 2012
No, but you should know that you will have to pay all cash, will be bidding against veteran investors, you won't have the opportunity for inspections, and there could be issues with title.
0 votes Thank Flag Link Fri Dec 28, 2012
Thanks for giving a straight answer.
Flag Wed May 25, 2016
When you buy a property through "normal process" you get a title company to do a search for any liens or issues with clear title. Steve has given you a good list.
Flag Fri Dec 28, 2012
Thanks, Lance. What do you mean by issues with title?
Flag Fri Dec 28, 2012
No, you don't, but do plan on facing a bid for that amount.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Fri Dec 28, 2012
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