Auctions are a different animal all together as compared to other distressed options (Short Sales and REOs). Auctions are a good option; however, strong stomach for mystery and risk is a prerequisite. Also, if you intend to flip a property, you had better have already assembled your â€œcontractor team.â€ There are two types:
Trustee Sale â€“ When a lender/servicer goes through the process of a non-judicial foreclosure the last step is the Trustee Sale on the County Courthouse steps. The amounts of seasoned investors at these events far outweigh the number of â€œnewbies.â€ If you are looking for actual Trusteeâ€™s Sale auctions, they are published in the local newspaper on a weekly basis under â€œpublic notices.â€ Notices are also typically posted at the entrance of the County Courthouse. "Loans" need not apply: California state law requires liquid funds when your bid is accepted. The Trustee accepts cash or cashierâ€™s checks (and nothing else). Most who do this on an ongoing basis will go to the auction with several denominations of cashierâ€™s checks up to the amount they are willing to pay for the property of interest. Any set cashier's check overage will be returned to you. Condition of the property is a major concern, and you MUST individually perform a high level of due diligence to make sure you do not get stuck with a house that has major problems and existing liens.
Auction Company â€“ Each auction company will have their individual process posted on their website to tell you about deposit requirements and how to view the homes (i.e. http://www.williamsauction.com ). You have to have a cashiers check for deposit at a public auction. Seasoned bidders will have multiple cashiers checks of different denominations to make up a particular bid of a home. These auctions allow the bank(s) to unload lots of properties faster in this "bid-up" environment. It's really more of a pressure sales environment based on the premise that pitting buyers against each other results in higher selling prices for the sellers. Have a drop-dead figure for each property you bid on and once you reach it â€œwalk away.â€ Although you do get some time to do inspections, this is really a process for someone who is intimate with eyeing defects and has some level of construction experience allowing them to walk into a house and know what it will cost to place it back into shape. You can pay to have inspections done, but this might cause you to bid up the price of the home during auction time so you don't waste your money paid for the inspections. Really, there's no reason to be in an environment whose sole purpose is bidding-up a property's price in these times.