Sam:
Buying at the courthouse steps can be a very profitable experience however you should be aware of and have the ability to research a number of things...some are intangible like:
1. You should be aware you are competing with a group of people who are down there all the time and make a living doing this. Sometimes they don't like "newbies" and will bid against you just to mess with you or discourage you. Go down there as much as you can before your house comes to auction and just watch the process and who the players are.
2. If you are in the R/E business utilize your title rep to help you determine the liens and judgements that have been filed against the property. Obviously you will want to know if it is a 1st or 2nd lien that is foreclosing. You are buying everything in front of that lien. I have seen several people win the bid only to find out it was a 2nd, that can be embarrassing and costly too. If there is an IRS lien it will take 120 days to get them removed unless you negotiate a payment. Other liens can be difficult to remove and I usually just pass on these deals if they are certain types...
3. Use or subscribe to some of the online Foreclosure services. In CA I use Foreclosure Radar which is more localized service and have found their info reliable.
4. Call the Trustee the morning of the auction. It is usually a toll free number and you supply them with the TS number that is associated with the property. They will usually tell you what the opening bid will be and if any postponements are scheduled.
5. Physically inspect the property on the day of the auction and knock on the door of the subject property. If it is still occupied let them know (in the kindest way possible) that their home is being auctioned (even though they probably already know this). Just know that they are losing their home, they are sad, mad, scared, nervous and unsure about their future, so use some tact and sympathy to determine if they plan to move and when. You don't want people who will trash the place, steal all the appliances, etc. when they leave. I have often offered them "cash for keys" as an incentive to leaving the place broom swept and in decent condition. This is another intangible...
6. Have your cashiers checks ready and endorsed to the Trustee...I have lost even though I won because I didn't hand my cashiers checks quick enough to the Caller...
7. You usually won't be buying title insurance because this is not going thru escrow. You are paying cash, handing it the the Trustee's rep or Caller, he will give you a receipt and in a few days you will have the deed mailed to you. Record it ASAP because you are exposed during that time. If you buy title insurance get a binder that gives you a discount if you sell especially if you are just going to flip it. Call you insurance agent and insure the place ASAP as well. Some insurance companies will not insure vacant houses so talk to your agent. If the house burns down and hour after you bought it and you don't have insurance...well, just try explaining that to your wife....
These are just a few things I thought of as a response. Basically, it is not as easy as it looks. There are a lot of pitfalls. I am trying not to be discouraging because it can be a very profitable (although it is almost not anymore in my neck of the woods) Practice by observing. Watch the process. And finally...good luck!
