Questions About Purchasing a Foreclosure for My Primary Residence

6 Replies

Hi Guys,

Thanks in advance for your help.  I'm thinking about buying a foreclosure property for my primary residence.  (


524 Golf Glen Drive

San Marcos, CA 92069.


I'll be looking forward to an answer to this. 

@Randy Chang  You've got to be very careful about this. I'm sure there are lots of threads on BP regarding buying at Trustee sales and I suggest that you become very familiar with the auction process specific to California.

Check with your title company to make sure that the 1st lienholder is foreclosing and that there aren't any senior liens outstanding. Get a preliminary title report, if possible. Check to see if the taxes have been paid and account for this in your maximum bid if they're delinquent.

Have you seen the house in person? Do you have any idea what the house might look like on the inside? The listing says that it's occupied. Depending on your people skills, you might want to try to contact the occupants to get a look at the inside of the home. You might get occupants that are hostile and won't talk to you or you might have renters that might be cooperative and will let you inside.

Have you determined the ARV? What percentage of ARV are you willing to purchase the house for? Your competition will consist of fix and flip investors, buy and hold investors, and owner occupants such as yourself. In general, the fix and flip guys are willing to pay less than the buy and hold investors who pay less than the owner occupants. If you are willing to pay more, you will have an advantage. Decide what your maximum purchase price is before you go to the auction and stick to it.

There are lots of things to consider but I think these are the main ones...

I would be very leery of bidding on a foreclosure.

First of all, you won't have the same disclosure requirements to somewhat protect you that you would have with a conventional sale. Foreclosures are sold "as is."  It's difficult to impossible to get a proper inspection of the property done before the auction.

The property could also have tax or other liens of which you're not aware beforehand. You can end up spending thousands of dollars clearing those up.

If the previous owner is still living in the property, and is not cooperative, you'll have to go through the eviction process to get him out. And then there's the potential of malicious damage done out of spite. 

If the home is not occupied you have to contend with the potential damage done by vandals and thieves. During the time the home is vacant, it could turn into a party pad for horny teenaged high school kids. Or thieves could break in and steal fixtures like copper wiring, HVAC equipment, etc.

Personally, I don't think it's worth it, and I would advise against it. But that's just my personal opinion.

@Andreas Mirza  @Fred Heller  .... thank you guys both for chiming in.  Looks like I will let this one go, as I'm not a seasoned investor in foreclosure properties.

@Randy Chang  Just because you're not a seasoned investor doesn't mean that you can't do this if you really want to. You need to do as much of your due diligence upfront as you can before the auction. You need to have cashier's checks made out to you (or your company's name) name in the ENTIRE amount of the winning bid and they expect you to pay immediately after winning the auction. All sales are final and are "as is," "where is." They are risky transactions and buyers expect a discount to market value to make up for the risk. The bigger guys do more volume so they can can absorb losses on a property here or there because they make up for it with other buys. You don't have the same protections as you do if you're doing a traditional type sale.

I haven't been to  in a couple of years but they are very good at driving the price up as high as they can. They also typically try to get the beneficiary (foreclosing entity) to start out with as low a bid as possible to get the maximum amount of people interested. It got harder and harder to buy a property at discount since the hedge fund buyers were bidding things up to and over market value. I understand that these guys are mostly gone so maybe there's more chance of getting a deal nowadays. 

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