“What do you think of buying at a sheriff’s auction trustee sale?”
Answer:
It’s only for the faint of heart.
While there are some deals to be had, here are the downsides:
1. Generally can’t see the home before bidding
It would be more than awkward to casually knock on the owner’s door and say, “Hi. I’m bidding on your home at tomorrow’s auction. Do you mind if I have a little look-see?” You might find yourself looking down the business end of a shotgun. Some auction buyers do peek through windows of vacant homes (or—real world answer—illegally break in for closer look), but bear in mind the home still belongs to the owner.
2. You must pay all cash, via cashier’s check
No financing allowed at trustee sales.
3. Competing against pros
Many grizzled veteran investors bid at foreclosure sales. So you may get a good deal, but you probably won’t get a great one as they’ll snap it up.
4. Postponements
For a variety of reasons, right now the vast majority of trustee sales are postponed numerous times. So you may do all your homework, drive to the auction, bring your cashier’s checks, only to have the foreclosure sale postponed, often over and over.
5. May inherit liens
You REALLY have to do your homework to make sure no extra liens (IRS, city fines, etc.) come with the house. It’s a really bad day when you find out there’s a $70,000 lien you didn’t know about. That happened to one of my clients.
6. May inherit occupants
You’ll probably know if there are occupants before you offer. Beware that the “Protecting Tenants in Foreclosure Act” requires you to let tenants stay for 90 days after foreclosure, or even longer if they have a bona fide lease (they must pay close to market rent).
