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Buying at Trustee Sale |
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Buying at Trustee Sale |
Information is everything! Up to date accurate information is essential for investing
in foreclosures. You will need a source for knowing what properties are going to sale, for
how much and when. Please see Pre-Foreclosure Information for
some sources. Foreclosure sales are commonly postponed for many reasons, some because
owners are trying to save the property, others because the lender needs more time for
proper processing. You will need to track properties you are interested in, making sure to
record postponement dates and reasons for postponement. KEEPING AN ACCURATE DATABASE IS
ESSENTIAL. When a property has postponed many times, other investors will sometimes lose
track of properties you are interested in, thus reducing competition at the actual sale.
Properties are tracked using a Trustee Sale Number (TS#). This number is generated when a
property enters foreclosure and is used by the interested parties. When you are seeking
information regarding a property, this number is usually used to reference the property.
Trustee's are the ones usually processing a foreclosure, typically the only information
they will give out regarding a property will be the date, time and location of a sale
along with a bid if it is available or a postponement date and reason if the sale
postpones.
Bids are available shortly before the sale, this can range from the day before up to the
actual time of sale. When a bid is available, there is a good probability the property
will be going to sale instead of postponing. Be aware that published bid amounts will
differ from the actual bid amount at the sale. Sometimes they will be slightly higher to
cover actual costs and sometimes the lender will reduce a bid making a property an
attractive purchase.
Posting companies handle the publication and posting of foreclosure notices along with
acting as the auctioneer at the sale site. Typically cancellations of sales are announced,
then postponements followed by properties going to sale. Again, everything is referenced
by TS#, pay attention so you don't miss properties you are interested in.
The auctioneer will ask if anyone wants to qualify, either before all properties are
announced or before individual properties are announced. To qualify, you will need to show
the auctioneer cash or cashier's checks sufficient to cover any bids you will be making.
Some Trustees specify checks are to be made out to them, usually you can get cashier's
check made payable to you, then if you are a successful bidder, you endorse them payable
to the Trustee. Common practice is to have large checks to cover most of the expected bid,
with smaller checks to cover increases in the bidding. You really do not want to have one
check for $300,000 if you are going to be bidding on a $150,000 house or if you will want
to buy more than one property. Once you sign your check over, you will not have the
surplus funds available for a while. When bidding and qualifying, keep in mind that anyone
around you is a prospective bidder, if you allow them to see the maximum amount you can
bid to, you have weakened your position. The same holds true for notes you have written or
numbers, keep your information private!
BIDDING. The auctioneer will ask if anyone would like to bid when they are auctioning a
property. If it is a property you are interested in, your bid should be a penny over the
opening bid. The property will not sell until the third call and some people like to wait
and see if anyone else is showing an interest. Relax, wait to see if other bidders are
going to jump in, if no one does put your "penny over" bid just before the third
call. If other bidders are intersted in the same property, bids will go up usually in
hundred dollar increments. Know the maximum bid you are willing to place and do not exceed
that number. It's very easy to get involved in a contest of who's going to win the bid, if
you are investing, you need to make a profit, not prove you can bid higher.
If you are the successful bidder, you will need to sign checks over to the Trustee. Usually, after all sales are complete, the auctioneer will write you a receipt, ask how title is to be held and you'll be done. The Trustee can record the Trustee's Deed for you or they will send you the deed along with any excess funds from your checks. Sales are sometimes invalidated by legal reasons, if so, you will receive your funds back. Expect to have everything done one to two weeks after the sale.