Hi BP family!
Firstly thanks to all of you for always providing such awesome feedback here on the forums you have truly been a wealth of knowledge to a self proclaimed "Newbie!"
Now then, on to the meat and potatoes of the thing. My great-grandmother passed away a few years ago leaving behind her estate to her children legally known as the "Wiley heirs" (Wiley was her last name). It now appears that the executor of her estate (my great uncle) has not be able appropriately managing the expenses left behind after her passing and her home will soon be sold off at an auction.
My mother (granddaughter of the deceased) is interested in purchasing the house at the auction knowing that she will likely be able secure the home for well under market value and may have a wonderful first flip opportunity with the purchase. I just want to make sure that legally my mother can indeed purchase the home at the auction in that she is a relative of the deceased and the property executor but is not one of the named heirs nor an heir to the current estate executor. We live in North Carolina by the way (not sure if the laws surrounding this sort of thing vary from state to state).
Thanks in advance for your feedback and if I haven't clearly presented the situation please let me know and I will do my very best to clarify.
I am not an attorney but I see no reason why she should not be able to purchase at a public auction. In order to win she has to bid more than anyone esle so there is no conflict of interest.
It is my understanding that the house will be fair game at the public auction regardless of familial ties. If your family has an estate attorney, I'd consult him or her to be 100% sure but I'd say if she's the highest bidder then the place is her.
I'm not an attorney and this is not legal advice.
Regarding "My mother (granddaughter of the deceased) is interested in purchasing the house at the auction knowing that she will likely be able secure the home for well under market value and may have a wonderful first flip opportunity with the purchase." If this 'auction' is a trustee sale because of default on a mortgage, expect to have competition at the courthouse steps. If the outstanding balance on the mortgage is low, you could be working with the executor to find better alternatives than a trustee sale.
What kind of auction? Foreclosure on a mortgage? Tax sale? Or is the probate court forcing the sale of the property in the estate?
Does your mother have any experience with foreclosure auctions? There are a lot of risks. If this is a public sale there is certainly no guarantee that your mother can buy it for under market value. Most markets have a lot of cash investors working the foreclosure sales so lots of competition.
Depending on the situation, a better play might be for your mother to buy the property from the estate before the auction.
I was just going to say the same thing basically as K. Marie, my thought would certainly be to get in contact with the bank that's foreclosing and see if they will play ball on this, sometimes they are fairly easy to deal with and others are not at all! Also, is this the only mortgage on the house? Are there any other liens attached to it? I see the NC is a non-judicial foreclosure state, I'm in WI and have bought numerous auction houses but we're a judicial state, so I guess there are some differences. Another option for you would be to contact a realtor in your area who says they're experienced with short sales, which it sounds like this may end up being. Hopefully you'd find the right one, but if you get a realtor that's truly experienced in handling short sales, they might have better luck talking to the bank and seeing if they'll agree to something before sending in to the auction.
Wow guys thanks so much! I should've known BP would come through with awesome advice. Sorry for the delay I was pretty busy over the holiday weekend but have been anxious to get back to your feedback. To clarify a bit someone ask what type of auction this is. I have already done all the investigative work I can and have learned that the house is going to auction settle a Medicaid lien against the house. After talking with Medicaid they are aware that the house is likely worth less than the actual money to be made at the auction and just clarifying that these are the steps the taken in these matters here in NC. We have talked about buying it outright before the auction my only concern there is does that absolve the executor of his responsibilities to the creditors? If so we would defiantly feel comfortable moving on the deal before the auction date. Anybody have any insight on how selling the house now affects the overall creditor obligations?
This is not a mortgage lien and therefore not covered by statutes I am familiar with and not a part of my business where I have any competence. I would seek legal help with a competent attorney well versed in these kind of liens/forced sales to find a resolution.
I wish you all the best.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing