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My First Time . . . At a Courthouse Auction Trustee Sale

By Christine Donovan

Real Estate Agent with Donovan Blatt Realty 01267479

July 26, 2009 10:15 AM

My First Time . . . At a Courthouse Auction Trustee Sale

Have you ever been to the County Courthouse around lunch time and seen a number of people loitering out front? I've been there; as an attorney, I often attended early afternoon sessions at the Orange County Courthouse but never gave much thought to those milling around out front just around lunchtime.

Here in Orange County, we have an incredible number of notice of defaults and trustee sales occurring.

I've been aware of the methodology; a Notice of Default is filed after the owner fails to make several mortgage payments, as soon as 90 days after that, the lender/trustee can file a Notice of Trustee Sale and then sell the house three weeks later.

Orange County Trustee Sale

It sounds pretty straightforward, but it just doesn't always work that way.

Many times, I've had the trustee sale put on hold while I was in the process of negotiating a short sale. Even then, there was no reason for me to attend a trustee sale at the courthouse; all of the communications were by phone or in writing.

Recently, I had the opportunity to actually attend the Trustee Sale at the Santa Ana Courthouse and see first hand what happens when somebody buys at auction or a house becomes an REO (Real Estate Owned).

An REO means that the lender has basically bought the house on which it had a mortgage back from itself and now owns the property.

The first thing I noticed was that there were a number of casually dressed people sitting and standing around the front of the courthouse, as the auction takes place at the entrance to the Courthhouse, not inside.

Orange County Trustee Auction Sale

About 12:17pm. the auctioneer called out that she was about to begin the day's auction. I'm not sure what I expected, but the woman in jeans and a grey t-shirt with her hair pulled back in a ponytail, taking an occasional sip from her cup was not what I would have pictured. She began with a long list of the sales that had been canceled or postponed. These occur for several reasons - bankruptcy, loan modification, or perhaps a real estate broker, like me, is working on a short sale and asks the lender to postpone the sale.

Then, the auction began. There were numerous people on their cell phones whispering to people on the other end as they had to make rapid decisions about whether or not they would up their bids. People increasing bids by a penny or $100 or occasionally by several thousand dollars.

Sometimes, no bid would be made, and the auctioneer would declare the property was sold back to the bank.

The whole process is very efficient, and it's obvious that some of the bidders there do this as a full time job.

The house we were there to bid on ended up being postponed just after noon, so we didn't get to make a bid, but I really enjoyed my first time.

Have you even been to an auction on the courthouse steps? Have you considered buying a foreclosure?

If you have questions about either, give me a call at 714-319-9751 or e-mail Me!

Click for a free list of Orange County foreclosures or a free list of Orange County short sales or e-mail Me!

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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.

Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? Contact me at christine@donovanblatt.com or 714-319-9751 to discuss your options.

Want to buy a home or to list your property for sale in Newport Beach, Costa Mesa, Huntington Beach or Orange County? Contact me at christine@donovanblatt.com or 714-319-9751 to learn about my system which will make your buying and selling experience easier.

Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.

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Connie Harvey

Pilkerton Realtors - Brentwood, TN

Realtor - Nashville TN Real Estate

Christine, I've always wondered about the process. They didn't do this on Sunday did they? I should try it too sometime.

Jul 27, 2009 09:29 AM

Christine Donovan

Donovan Blatt Realty - Costa Mesa, CA

Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Connie - Nope. It's Monday through Friday.

Jul 27, 2009 02:13 PM

Satar Naghshineh

Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Hi Christine, I've been there with my client because we were trying to buy a short sale and the listing agent didn't seem to know what he was doing and we saw the trustee notice on the door so we went to see if it was going to be auctioned or if the listing agent was able to get it extended.

You are right, there were people there who seemed like they took a seminar on making money in foreclosures and there were regulars there who knew the trustee's rep by first name. My experience was 95% of the foreclosures were canceled or no bids were made (credit bid was higher than value of property). The other 5%, the regs knew about the property and were there to buy them. Mostly the loans were originated prior to 2004 so after you pay the credit bid, you had equity.

While I was there, I met a renter who wanted to see if the house was auctioned or not as the owner told him that it was a mistake and he should continue paying rent. I also met another guy who was so excited that he was going to buy this 500k house for 70k at the auction. I told him to make sure it wasn't the 2nd or 3rd lien holder foreclosing as he will have a rude awakening when he has to pay off the senior lien holders.

I've been investing and flipping foreclosures before being licensed. My take is that a trustee's sale is the worst place to buy a property because you have no idea about the history of the house or it's condition. There is usually a reason why it went into auction and not picked up by an agent or investor. It could be that it has unpermitted modifications that require huge fines or tear down. It could have foundation issues or major plumbing and electrical issues, etc. Even those that have no issues and are occupied, you might encounter a malicious move out from the previous owner or tenant. Don't get me wrong, you might find a deal, hence the regs who are buying to fix n flip, but my experience tells me that they are rare and high risk. Plus, as an investor, I liked picking these properties up with no or little money then flipping them.

The best way to pick up properties is in a short sale or pre-foreclosure scenario. I also wouldn't encourage my clients to buy at a trustee's auction without having a buyer broker agreement in place and with specific knowledge of the property!

Great Blog. I hope I have the pleasure of doing business with you as we are in the same market.

Jul 29, 2009 06:34 PM

Christine Donovan

Donovan Blatt Realty - Costa Mesa, CA

Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Hi Satar,

I strongly recommended against attempting to purchase as the trustee sale for many of the reasons you mentioned above.

However, when my clients insisted that they intended to do so, I did what I could to protect them by obtaining a preliminary title report and driving by the property with them. Unfortunately, I couldn't find a previous listing to obtain some idead (however dated) about the condition of the interior.

In the end, it didn't matter as the sale was postponed, as so many are.

Jul 30, 2009 02:47 AM

Russel Ray, San Diego Business & Marketing Consultant & Photographer

Russel Ray - San Diego State University, CA

Going to auctions used to be a full-time job for me and my partners. Been through many of them. I always showed up in flip flops, shorts, and t shirt.

Jul 31, 2009 06:52 PM

Christine Donovan

Donovan Blatt Realty - Costa Mesa, CA

Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Russel - That seem to be pretty typical attire there. I guess when I went to that courthouse, I was used to being there to represent my clients before the judge, and I was always in my court suits.

Jul 31, 2009 10:23 PM

Anonymous

Bill B

Christine

IS there a way to obtain the property info ahead of time so the homes could be looked at and resesearched? If so, how and when?

Dec 31, 2009 07:54 AM

Christine Donovan

Donovan Blatt Realty - Costa Mesa, CA

Broker/Attorney 714-319-9751 DRE01267479 - Costa M

There is. I provided this information to my clients.

When buying at auction, I believe it's imperative to gather as much information as possible to make the best decisions under the circumstances.

Please contact me if you would like me to provide this to you. I can be reached at 714.319.9751.

Dec 31, 2009 03:39 PM

Anonymous

Stacy Pham

Hi Christine,

Great post. Thank you.

How do I go about in getting a list of properties for the next aution?
I tried your web search, but it only gave the street names and no numbers.
How much do you charge for the list? If I want to get a list on a regular basis (whenever there
is an auction comes up), is there a monthly fee for this service. If so, how much?

If I also want a prelim for a certain house, how much do you charge for runnign a prelim?
I am only interested in condos in Santa Ana.

Thank you very much,

Aug 21, 2010 08:10 PM