Let's talk about the Trustee's Sale - Part 1

I have bought homes at the Trustee's Sale and want to share my knowledge on the topic. I'll break the information into 6 topics:

A SIX TOPIC SERIES ON THE Trustee's Sale

1. *** What is the Trustee's Sale and how do homes get there? ***
2. Who can REALLY buy at the Trustee's Sale?
3. How do you find out what homes are available to buy?
4. How are they priced? How do you learn the value of the homes?
5. How to pick the homes you really want to bid on?
6. What is the bid process? What happens if I win a bid?

What is the Trustee's Sale and how do homes get there?

The Trustee's Sale is a means for selling foreclosed properties auction style. Most auctions are at a public place located in the same county as the property. The auction location is usually listed online (e.g. RealtyTrac which is a subscription service) or you can typically get the location from the trustee or the county clerk. If you call the county clerk clarify that you are looking for the location of mortgage foreclosure auctions and NOT tax foreclosure auctions.

The most common location for a Trustee's Sale is at the county courthouse, but auctions can also be held at a trustee’s office. A trustee is a person or entity who is the legal representative of the mortgage company (also known as the beneficiary) holding the note (mortgage) on the subject property. It is the trustee’s responsibility to look out for the best interests of the mortgage company and facilitate the foreclosure process. An auction property is one that is sold or about to be sold at a Trustee's Sale. This means that the property owner could not pay off the arrears or sell the property before the date of the auction.

It takes 6-months for a property to show up at the Trustee's Sale, but it could take longer. WHY SO LONG? The answer is: To give the homeowner every chance to keep their property. Sometimes the property owner can strike a deal with the lender that can delay the process. You see, mortgage companies do NOT want to foreclose because it is a very expensive process. But the further into the 6-month process the homeowner goes the harder it is to keep their property. That’s because the missed payments keep adding up along with penalties, additional interest, and legal fees. Here are the actual steps:

• 0 to 89 days (0 to 3 months) - The homeowner receives calls and letters from the lender threatening foreclosure and the bad credit that results.
• 90^th day - the lender files a NOTICE OF DEFAULT (also known as a NOD) and the trustee becomes officially involved. This is also when most public notices are filed.
• 150^th day (5 months) – The property is scheduled for the auction by the trustee.
• 180^th day (6 months)- The property is auctioned to the highest bidder

The Trustee's Sale is open to all bidders, including investors and homebuyers, and is sold to the highest bidder.

Sounds interesting so far, doesn’t it? Who wouldn’t want a deal on a property? BUT IT’S JUST NOT THAT SIMPLE. It’s called a PUBLIC auction BUT HOW PUBLIC IS IT? Can YOU really buy a house at the Trustee's Sale? You will get the INSIDER INFORMATION to that question in my next post.