Long time reader, first time poster. I came across an auction property for my local court house but I've never bought an auction property before. Hoping someone can help. Secondly I don't have any experience buying condos.
1) Would anybody know if county sales/sheriff sales have closing cost or buyer's premium cost like Auction.com and if so, how much are they typically? I live in Minnesota if that helps.
2) For the auction, I found out it is cash only. For large cash amounts I plan on doing certified checks. My question is, who do I make the check out to? Is it the county or the attorney / firm representing the mortgage company? If it is a law firm, how do I know which law firm?
3) If there is a second mortgage on the property and possibly an association lien (I am trying out if there is one since the the county recorder's Certificate of Title show's both a association document for foreclosure and a mortgage doc filing for foreclosure), would they also be at the auction to bid as well? I want to make sure I'm not bidding against the law firm appointee on the second mortgage lien or any judgement liens and am bidding on the first lien if that makes sense. How do I make sure it is the first lien?
Anything would greatly help!
I think you would want to get a title search or O&E done to determine the lien position-especially if there is any question about it.
The auction should specify the terms and payment and if any premium or commissions are included.
To take a step back - I assume this is a Sherrif's sale. Not sure if you are aware but this is different than a normal auction, if you are the highest bidder that doesn't mean you bought the property. There is a redemption period (typically 6 months) and a 60 day notice before title of the property passes. During this period the owner can re-claim the property and additional liens can be filed, say a mechanic's lien. They can steal your position. You would get your deposit back but this could end up as a big waste of time. There are people who do well in these but the biggest reason I haven't pursued them is that the mortgage company usually ends up placing the highest bid. They aren't going to walk in having $200k of debt on it and let someone purchase it for $50k. The house may look in poor shape but like you, the bank hasn't been in it and they aren't going to give away an asset.
The last reason I haven't purchased these is because you can't enter the property and someone is likely still living there. This person is losing their house and their credit will be shot. It isn't the result of the mortgage company but often times these are left a mess, that assumes they don't start breaking and causing damage on their own.
Your profile says you are a newbie and risk averse - if so this is not a good first deal to take on.
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