OK, so I am a fairly new investor from Washington, DC an I am realizing that most of the worthwhile deals in the city are auctioned properties or wholesaled deals which require "ALL CASH" offers. Since I am fairly new I don't have enough to purchase these deals with Cash. I am wondering is there anyway to finance these deals maybe with either private money or some type of loan ? I apologize in advance if my question seems scattered but it must be a way to get this 'ball rolling".
The details of "sheriff auctions" (aka trustee auctions) vary from state to state. But its pretty common that they are "cash on the barrel head" right on the spot. They are here in CO. Its possible to get a loan for those. But your lender is going to have to go to the auction with you with money in hand, usually in the form of cashier's checks.
When a seller says "all cash", there could be several factors in play. One is the property may be too junky to qualify for a loan. Another is they just don't want to deal with the lending process.
A strategy is to accumulate enough cash to buy such deals, then turn around and refinance them shortly after the purchase.
I'm in the same boat. I have a little cash that I want to use to bid on a property listed on auction.com but I'm not sure if it will be enough. I have been pre-approved for loans in two separate banks, but it isn't cash in hand. In any case, I don't really want to spend more than I have on this auction, so if I don't win the auction with what I'm willing to spend, so be it. I'll find another way to fund my first property.
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I heard some auction they will only give you a Special Warranty Deed and its the buyers responsibility to evict the seller and in some cases title will not be clear..
A special warranty dead means that the current owner can only guarantee that no liens have been placed upon the property during the time the current owner has owned the property. You still need to do your due diligence and check the title as much as you can. I've gone to the county courthouse and checked for any liens on the property I'm interested in. You could also pay to have this done if you aren't comfortable doing it or are not sure if you have caught everything.
Thanks for all the tips. I'm getting started too and I was confused about pre auction and foreclosure auctions. Doing due diligence is the key to preventing future anxiety.
Trustee sales here result in a public trustees deed. Trustees are a county position here. If the lender takes it and resells, they give you a special warranty deed.
You can get title insurance with a trustee sale purchase. You have to have the right title company that can do a search very quickly. You only have about 44 hours between when the properties to be auctioned are announced and when the sale happens. If you're going to buy at trustee sales, you really want to find such a title company and do title searches before bidding. That avoids the "I bought an HOA lien and now the first is foreclosing" or "I bought a second not realizing it was a second" type posts. If you bid, win, and find out there are other encumberances in front of the lien that was just foreclosed, you can easily lose the entire amount you bid.
In an auction scenario is the winning bid always the highest? Just wondering if buying at auction is completely straight forward with the offered price being the only factor...
Sellers are sellers, they want to sell. In real estate it is always, " Buyer beware". No one cares if you are protected they simply have a job to do and that is to sell the property by whatever means. If you want to buy a property at what you estimate, calculate or know for a fact is a discount do not expect everything to be smooth or a bed of roses. Everyone from banks, to agents to auctioneers, it out for themselves. It up to you as the buyer to watch out for yourself. You may not have enough time to properly evaluate a deal but when it comes to foreclosures and auctions its pretty much take it or leave it. Get yourself ready or stay out of that particular way of obtaining a property.
I have read several posts on here by newbies who make the darn mistakes imaginable and well known to others but not to them.
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