Purchasing property via a Trustee sale has some benefits that outweigh some of the risks. Knowing the basic process is the first step in a successful winning bid and a home with instant equity.
When you purchase a home at the Trustee Sale, you are buying a lien, not a property. If you don't do your research, you could accidentally buy a second position lien in which case you will have bought an obligation to pay off any first position lien.
The chain of title will determine all liens on a given property. This will show the mortgage liens in addition to any property tax and/or IRS liens. Do you research carefully as this is a crucial step in the process before bidding on a property. Don't proceed to the next step until you feel comfortable with the valid liens and you've established your position.
Remember you are buying the property in an "As-Is" condition. There will be no inspection periods, no termite inspections, no home or seller warranties and no title insurance.
Once you win the bid, your bid deposit of $10,000 in the form of a cashier's check is handed to the trustee. If you fail to close the transaction the following day, you will lose your deposit and possibly face additional legal ramifications.
Getting around the cash needed in 24 hours is usually done thru a pre-determined hard money lender. The interest rates are high but you don't need the money for long. Usually less than 30 days as you will refinance out of the hard money into a conventional loan. And yes, you do need a down payment.
Most homes that you purchase at the Trustee sale will need at least paint, carpet and miscellaneous repairs. However, when purchasing at the Trustee sale you are buying a property for under today's market value and have already calculated the potential work that needs to bring the home up to standard.
Most investors or buyers will not pay over 70% of market value. Keep in mind if you refinance the note using a conventional mortgage they only lend 80% of value.
When you purchase a home at the Trustee Sale, you are buying a lien, not a property. If you don't do your research, you could accidentally buy a second position lien in which case you will have bought an obligation to pay off any first position lien.
The chain of title will determine all liens on a given property. This will show the mortgage liens in addition to any property tax and/or IRS liens. Do you research carefully as this is a crucial step in the process before bidding on a property. Don't proceed to the next step until you feel comfortable with the valid liens and you've established your position.
Remember you are buying the property in an "As-Is" condition. There will be no inspection periods, no termite inspections, no home or seller warranties and no title insurance.
Once you win the bid, your bid deposit of $10,000 in the form of a cashier's check is handed to the trustee. If you fail to close the transaction the following day, you will lose your deposit and possibly face additional legal ramifications.
Getting around the cash needed in 24 hours is usually done thru a pre-determined hard money lender. The interest rates are high but you don't need the money for long. Usually less than 30 days as you will refinance out of the hard money into a conventional loan. And yes, you do need a down payment.
Most homes that you purchase at the Trustee sale will need at least paint, carpet and miscellaneous repairs. However, when purchasing at the Trustee sale you are buying a property for under today's market value and have already calculated the potential work that needs to bring the home up to standard.
Most investors or buyers will not pay over 70% of market value. Keep in mind if you refinance the note using a conventional mortgage they only lend 80% of value.
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