Re: Buying a house through auction?

Cookie2025 · ‎03-10-2010

@tansy wrote:
@CelticCrafter wrote:
@wagirl wrote:
My BFF and her mom just bought a condo by the aution method but they went down town Phoenix where a group of people gathered to do it just on a street corner. But she researched it very well and by doing so, was able to get this condo for what her price range was. Now this happened because the original owner died and the bank took it back then autioned it off. But homework is needed. Don't go into it cold turkey. You have to pay upfront afterwards and there was a $10 k fee that you don't get back if you are out bid. But it is on the up and up.They got the deed a month later and are now doing a total re model as we speak.
That doesn't sound right...
I considered buying a home via auction in the general Phoenix area. There was a non refundable fee of 2k.

Is the 2k fee based on the starting bid ?

I know you must come to the auction with a money order /certified check for a set amount in order to get into the bidding pool.

I could see the 10K the OP is referring to as being non-refundable IF the buyer does not come up with the financing in a set period - I believe in MD it is 30 days.

After surving several re-models and builds I am too old to go through that process.

Cookie2025 · ‎03-10-2010

@Andreatoo wrote:
As someone who works in real estate, specifically for a real estate attorney, I suggest you spend the money to do a title search prior to the auction.
Often if they're not paying their mortgage they're not paying other things too. You may end up with more expenses than anticipated if you don't know what's going on with the property. You can also go on the respective county's website and search for liens that may be attached to the property

@Andreatoo What should a person look for in a title search.

Stray · ‎04-20-2013

We have a condo unit on our floor that is a sheriff's sale.....every state or even county within a state may have different guidelines. My advice to you is to go to their website (county where property is located) and read about the property and procedures, find the property on the site and any particular information re to the property will be listed along with date/time of auction; it also appears in your local paper. For this property, in NJ....it is an estate with a reverse mortgage with maintenance fees in arrears. At the auction, sheriff's fees and liens are paid which lowers the selling price to the buyer and lessens profit to the estate. So no debt is assumed by the buyer. The mortgage company gets their loan return and the remainder of money from the sale, if any, goes to the heir of the estate.

Here they suggest you bring a certified check or cash to the auction for 20% of the highest price you would pay for the property.

the remainder is due 10 days from the sale date

the original owner has 10 days to buy back the property.

You dont get to inspect the property but you can go to the Town Hall of where the property is located and get the deed, tax burden etc re the property.

My neighbor is interested in buying the property and I have the key so he is not buying sight unseen but it is risky. He estimated $50,000 in repairs to make this unit livable... so he can determine this property's value for him and his top dollar. There have been units sold here that are lemons but are usually purchased by people who do this for a living: totally demolish, upgrade and sell or rent at high profit.

wagirl · ‎03-09-2010

I know, I know--but it was true that the 10K was not refundable. I noticed in the early shows of Flip or Flop, they had to pay $10 K up front too, when they bought at aution. Now that $10k is applied to the house if you win it. Also these houses are sold as is . Fortunately my BFF and hubs lived right next door to the condo they bought and he is in construction and knew what was wrong or good, which this place was in very good shape. They are doing extensive remodel,will move in to it and then BFF's mom is buying their condo. Price started out at $62 K and they paid $76K. Homework is the key!!!!

Andreatoo · ‎04-04-2014

@Cookie2025

A title search provides you with everything that's recorded on the property. Be it liens mortgages, deeds Etc. You want to make sure that no one else or entity has an interest against the property, that the mortgages and/or liens are satisfied. There could even be unresolve probate to consider. Keep in mind that if the lien has not been recorded yet it won't show up there but that doesn't mean it doesn't exist hence my suggestion you also go to the county's website and look through code enforcement

Also, I forgot to mention, check the taxes as well as there may be years of unpaid tax certificates that need to be paid or even a pending tax deed sale. that will not come up on a title search.

The courts are not obligated to tell you anything and trust me that they don't! I've seen lots of people and just recently lose their deposit for bidding on condos and then finding out there were mortgages as well and deciding to back out of the transaction

Cookie2025 · ‎03-10-2010

@Andreatoo wrote:
@Cookie2025
A title search provides you with everything that's recorded on the property. Be it liens mortgages, deeds Etc. You want to make sure that no one else or entity has an interest against the property, that the mortgages and/or liens are satisfied. There could even be unresolve probate to consider. Keep in mind that if the lien has not been recorded yet it won't show up there but that doesn't mean it doesn't exist hence my suggestion you also go to the county's website and look through code enforcement

Also, I forgot to mention, check the taxes as well as there may be years of unpaid tax certificates that need to be paid or even a pending tax deed sale. that will not come up on a title search.
The courts are not obligated to tell you anything and trust me that they don't! I've seen lots of people and just recently lose their deposit for bidding on condos and then finding out there were mortgages as well and deciding to back out of the transaction

@Andreatoo my SO had people in the Mortgage and Title businesses so I never worried about those issues.

For all I know he probably had it looked into before going to an auction or buying a foreclosure.

I think you have to have nerves of steel to deal with those issues. In the past 20 years people have mortgaged themselves into the ground and everyone has a lawsuit going on.

Andreatoo · ‎04-04-2014

@Cookie2025

If you want a safe way to make money in real estate I would suggest purchasing tax certificates. It may not be a quick turnover but you're guaranteed your money back with substantial interest that you certainly don't get from a bank account! LOL

Cookie2025 · ‎03-10-2010

@Andreatoo wrote:
@Cookie2025
If you want a safe way to make money in real estate I would suggest purchasing tax certificates. It may not be a quick turnover but you're guaranteed your money back with substantial interest that you certainly don't get from a bank account! LOL

NOW that is something I am interested in !

Andreatoo · ‎04-04-2014

@Cookie2025
It's really quite simple. When the homeowner doesn't pay their property taxes the municipality sells tax certificates. what you would be doing is paying the face value; when they eventually pay their taxes they're paying it plus your interest. The reason it's guaranteed is that eventually, if it's never paid, a tax deed will go up for auction and then you would be paid. there are those, with money to invest, that will) purchase tax certificates around the country!