New to Real Estate · American Canyon, CA · Member since 2015 · 3 posts · 2 votes
Hey this is my first post and it is a question: Is the winner of an auction responsible for the estimated debt on the property?
I have been looking on foreclosure sites such as auction.com and getforclosedhomes.com and I see two numbers. 1) opening bid and 2) estimated debt. The estimated debt is how much the current homeowner still owes on the property. So, will the winner of the auction for that property have to also pay the estimated debt?
I am seriously considering going to the courthouse steps to bid on a property but am concerned that a bank will go after me for the debt still owed on the property when I win the bid. I am hoping it doesn't work that way.
No.....whatever you bid, if accepted, clears that debt entirely from the property. There may be however, other debts or senior liens that Remain with the property and will be a lien against your property.
The absolute best money you can spend would be $200-400 for an hour sit down with a local RE attorney familiar with foreclosures. There is a lot that you just don’t know to ask about, plenty of traps for an uninformed buyer at auction.
No.....whatever you bid, if accepted, clears that debt entirely from the property. There may be however, other debts or senior liens that Remain with the property and will be a lien against your property.
The absolute best money you can spend would be $200-400 for an hour sit down with a local RE attorney familiar with foreclosures. There is a lot that you just don’t know to ask about, plenty of traps for an uninformed buyer at auction.
What kind of auction? Not all auctions are foreclosure auctions.
However you choose to buy, you need to understand the terms of the sale. You need to read and understand the auction terms or the terms of a contract if you are buying other than at an auction. IF you want to buy at Foreclosure auctions follow Wayne's advice.
@Tito Luna If it's the type of auction at the courthouse, the foreclosure will clear off the mortgage debt. However, any unpaid real estate taxes, water bills, and village fines will survive.
Hey this is my first post and it is a question: Is the winner of an auction responsible for the estimated debt on the property?
I have been looking on foreclosure sites such as auction.com and getforclosedhomes.com and I see two numbers. 1) opening bid and 2) estimated debt. The estimated debt is how much the current homeowner still owes on the property. So, will the winner of the auction for that property have to also pay the estimated debt?
I am seriously considering going to the courthouse steps to bid on a property but am concerned that a bank will go after me for the debt still owed on the property when I win the bid. I am hoping it doesn't work that way.
If you are new to RE investing, I would highly suggest NOT buying your first property at courthouse auction. Unless you have deep pockets and can learn from your mistakes, one deal could sink you.
Thank you Wayne, Ned, Bob, and Chad for answering my question and for some sound advice. It was a question I could not get a definite answer to around my circles. These little gaps can amount to big barriers.
If we proceed, we will proceed with caution and analyze the heck out of this property. We definitely do not have deep pockets. A trip to city hall and a title search is in order. On the surface this property looks like a great deal from my preliminary analysis and if there is no other major competition, I'm optimistic we can win the bid at 60% of the property's value (no more than 70%).
If not, it will be a great learning experience going to the courthouse and seeing the process.
Thank you Wayne, Ned, Bob, and Chad for answering my question and for some sound advice. It was a question I could not get a definite answer to around my circles. These little gaps can amount to big barriers.
If we proceed, we will proceed with caution and analyze the heck out of this property. We definitely do not have deep pockets. A trip to city hall and a title search is in order. On the surface this property looks like a great deal from my preliminary analysis and if there is no other major competition, I'm optimistic we can win the bid at 60% of the property's value (no more than 70%).
If not, it will be a great learning experience going to the courthouse and seeing the process.
Sounds like you are on the right path thought wise starting out at least. Be aware though that every one you see as a good deal, the next guy sees as well so, if two guys see the same deal, chances are that bid equaling 60% of the property value, will go up exponentially.
I think also, if you remember nothing else, remember Wayne's guidance on lien position.
Follow up - Another drawback that can happen is if a property up for auction cancels which is what happened to that property and another property that had also looked at. We also looked at a partially burned property but had to pass; for our level of experience (zero) of renovating homes we might have made a profit or it would have sunk us. We will keep on truckin' and hopefully we will find a property soon.
Follow up - Another drawback that can happen is if a property up for auction cancels which is what happened to that property and another property that had also looked at. We also looked at a partially burned property but had to pass; for our level of experience (zero) of renovating homes we might have made a profit or it would have sunk us. We will keep on truckin' and hopefully we will find a property soon.
it's a game of numbers. It's not uncommon to see more cancelled/postponed that those that actually go through sale.