We have already established that you are going into foreclosure. So what now? What is the process once I realize that I am headed down the foreclosure path?
A Notice of Default has been filed with the County you live in and you will receive a copy by mail. You have approximately three months (in most cases) to come up with all the payments you have not made and any additional fees they have tacked on. Let's face it, if you are already this far down the road, that probably is not going to happen. Unfortunately.
A notice placed in the newspaper for a certain amount of time (usually 3 - 4 weeks). This will include your name, and anyone else who is on the legal deed of the property, the amount owed, the address of the property, date and time of sale, etc. It is public information and will run in the newspaper for your County as a Notice of Trustees Sale. If you did not see it in the newspaper, don't worry, they will send you a copy of the notice in the mail so you will be aware of the sale date.
Buying at the Trustees Sale
Have you ever heard the phrase...."They sold it on the Courthouse Steps" and thought that it was slang for the auction that happened inside? In a nice, secluded room, very professional? Wrong! Trustees Sales literally happen ON THE COURTHOUSE STEPS! Funny isn't it?
If you are interested in buying a property that is going to a Trustees Sale, there are a few things you need to know.
- Find out what the property is worth. Obviously you do not want to take the time or pay the money to do an appraisal to get the value of the property. The next best thing is to call a Realtor. Ask them if they can tell you what comparable properties are going for in that area. This will help you when the opening bid starts and you want to make sure you stay within a certain amount to obtain equity (if available).
- You will need to find out, if you plan to place a bid, the amount required to be considered a qualified bidder. The last auction I acquired information on required that a bidder have certified funds of a minimum of $5,000.00. Certified Funds being, cash, cashiers check, etc. Personal checks MAY be accepted for the balance of the amount, but you would need to know before the auction.
- In addition to the final bid price, is there a buyers premium? That means YOU the winning bidder has to pay additional fees for the auction. It could be to pay the auctioneer, etc.
- Financing and payments. If you are the winning bidder, you will have approximately 24 - 48 hours to pay the remaining balance of the bid. I suggest that if you plan on using a bank for financing, have everything in place prior to the auction.
- Be prepared. Who is foreclosing? Example: If it is the 2nd Lien Holder, you may need to pay the 1st Lien Holder - WOW, didn't know about that! Are there delinquent Property Taxes? You need to pay those - yep....YOU. Definitely things to consider....
- Be aware. Just because a property is going to Auction does not mean it will actually be available. A Realtor may have the home listed and have an offer that came in, or the Property Owners may, by some leap of faith, come into some money and are working on payments, or maybe they are doing a loan modification. There could be a number of reasons that the Property has been put "on hold" for auction purposes. This can be unfortunate for you if you really wanted that property, but great for the owner who doesn't end up losing their home.
Here is what I recommend to anyone interested in purchasing at a Trustees Sale...
Talk to a Realtor. Hire a Realtor to work for you. NO, the Trustee is NOT going to pay a commission to your Realtor. YOU will have to pay it. I cannot tell you what the percentage will be, or what the rate they may charge you is because they may vary. But, can you really do it without them? That is a decision and a chance you will have to take on your own. But let's look at what they will do for you - in an extremely timely manner....
- Pull Comparable Properties to show you what the home would list for in that area.
- Check Title records to make sure there are no liens, property taxes, etc. And if there are, they will make you well aware before you go to the auction.
- Help you determine if this is a good property. Are there Easements? Problem with the foundation? Anything that they may be able to find they will tell you. (Please note, we probably did not build the home ourselves, so we don't know everything)
Whether you decide to use a Realtor or try to go it alone. BE DILIGENT. Please do your homework before you go. Remember, just because it is at auction doesn't mean it's a great deal. Ever heard the phrase "Buyer Beware"?
If you need more information, please do not hesitate to contact me! I am not an expert in this area, and all of the information I provided is public information. No secret knowledge here :) But I would love to help you and if I can't - then I will find someone who can!
Best of luck - and stay positive!