San Diego Housing Bubble News and Analysis

I think they inherit (as a buyer) any existing tax liens.

And I think those are able to come up as much as 4 months down the line.

Assuming no liens on the property, are there taxable transfers to me?

Seems you could just sign a promissory note that you will pay them back the money and put a lein on the house in their name.

i.e. make them look like a lender where the load funds before the purchase.

This way, the house doesn't have to change hands twice.

Not sure if you can do it that way - just a suggestion.

Are you planning to buy a home at auction with your relative standing there with you? It is not that simple. You cannot just target a home that you want and expect it to go to auction and be well priced. It is more likely that the property that you want will be postponed until a future date. It is even more likely, that the starting bid will be more then the fair market value. Only a hand full of homes per day out of hundreds is offered at a discount. You will have to target many homes and go many times in order to get a good deal. You will also have to make sure that you are buying a first lien and not get stuck with a second, unless there is still equity after covering the first. You will also have to make sure that there are no IRS liens attached to that house. You will also have to pay for any unpaid property taxes. Does your relative understand all the risk that is involved in these transactions? If you buy the home under your name, you can take a cash out refi for 70% of the current appraised value. Therefore, if the property does not appraise for 30% above what you paid plus any unpaid liens/taxes you will not be able to pay/refund the relative in full with the loan. I believe you can have your relative buy the home under their name and quit claim it to you or sell it to you under contract and just go straight to escrow. I have noticed a lot of interest in trustee's sales recently on piggs from people that do not have their own cash and do not fully understand the risk involved. It is very risky to do it with you own money and even more risky to use borrowed money. If anyone is attempting to do this under borrowed money, I would make sure that you keep some cash reserves to deal with any unexpected expenditures. These homes may be discounted for a reason and some may be move in ready, but you will never know for sure until you buy one.

"I believe you can have your relative buy the home under their name and quit claim it to you or sell it to you under contract and just go straight to escrow."

Gift tax?

You pretty much need to do a title search before going to a courthouse steps auction, if you did five title searches, one might actually go at auction. The problem is that when the bank repos, then sells on the open market, the liens are cleared, the second is wiped out, the seller then has to pay all back taxes and hoa. If you see a great deal at an auction, just know there is more than just an cracked slab that might be lurking, because at the steps you don't get clean title.

There was a place that went up for auction recently near me, a friend from pig e-mailed me about it and we wondered why nobody bought it at auction, since it sold at auction for 230k and two weeks later than bank listed it for well into the 300's, somebody missed a bargain or a flip, right?

Well, actually a buyer at the courthouse steps would have to deal with the other lien holders and the back fees. It turns out those costs were beyond 150k, but not advertised as part of the courthouse steps process, and it's not listed as a recording on the foreclosure services other than for the 1st mortgage. So letting the bank take it back, wiping the other lenders or paying them off, paying the back taxes (sometimes a couple years worth), then getting the clean title for 320k or 330k is actually cheaper than buying from the steps and settling the debts, which would have hit 370k minumum for that 230k bid. It looks like paying 30 cents on the dollar, but most fb's took an 80/20 and then heloc'd some more, so alot of these bidding prices are just the tip of the iceberg and what the primary lender is owed.

Let me see if I understand the situation.

You don't have the cash but your relative does.

Options -

1 - You work out a loan with your relative. It is simply between you and them. your relative gives you the cash, then you go to the auction with the money and buy the home. Title will be in your name. The terms of the loan are between you and your relative.

2 - Your relative buys the home. Title is in his/her name. Then after then receive title they convey title over to you. This is possible. Is this a taxable event? Possibly. You need to talk to an accountant about that. Again, you work out the payment details with your relative.

These seem to be the two choices. This is all independent of the challenges you have about researching the home you want to buy.

For you may palm upon us new for old:
All, as they say, that glitters, is not gold.