You will be competing with the bank that has the loan on it. The bank often places a bid with the trustee that will be the opening bid. They don't work like Storage Wars on TV where they start at a $1 and go up. The bank comes in with an opening bid often what is owed. Since the value is probably lower no one will bid and the bank now owns it so they can sell it for what they want. If you are going to make a bid you need cash, you better have done a title search to see if there are thousands of dollars worth of liens on it that will also be yours if you win the auction, and you better hope it is in good shape because there is no inspection.... more
When a property is listed for sale, most real estate agents will order a preliminary title which will indicate all current liens on the property. Sometimes, depending on the agent and local market practices the preliminary title is not ordered until a contract is accepted and a deposit is made into escrow. Either way, this initial preliminary title should be updated just prior signing closing documents in case any new liens have appeared.
A lender will not provide a loan without seeing a copy of the title report. Here is some information on what exactly the preliminary title provides:
Most buyers will purchase title insurance to protect against any unknown liens on the property. Lenders will require title insurance purchased by the buyer.
The California Association of REALTOR listing agreement has a specific paragraph stating that the seller confirms they are the rightful owner and no other person or entity have title to the property. The seller must be able to provide clear title and the ability to transfer without liens before closing the deal. However, this does not apply to auctioned properties.