Contrary to what people have said, a trustee sale is really an auction. Now the lender has indeed given instructions to the trustee as to what they will accept. Again, the best way to learn the ropes of auctions are to go to them. The short answer to your question is that in some cases the opening bid may indeed be below the default amount of the first mortgage. Do you simply have to exceed the opening bid to get the home? Well.. theoretically yes but again, I believe all cases are independent so the practical answer is possibly. Yes it would all vary with the desire of the lender to get rid of the property.
Getting to know a good title officer is helpful because they can not only obtain a preliminary title report for you, but they can help you interpret it and point out issues in it. Unless you have alot of experience with this, it is something I would recommend you do. You can bet that pretty much anyone else at the auction will be bidding on properties that they have made sure that they have a full understanding of any and all title issues.
I understand what you wrote but I know my own limitations. I consider myself an excellent engineer and realtor as well. However I do not hesitate to have my title officer give me his opinion on any property I have ever considered purchasing. I am not saying you don’t look at everything yourself as well, but utilizing expertise is something you should consider.
As far as inspections and performing due diligence goes, again, regardless of whether the home is an REO, Short Sale, purchased at trustee sale, or even a standard resale, I think the due diligence process should be pretty much the same. While short sales and regular resales do come with complete disclosure packages, it should be noted that disclosures only tell the buyer problems that the sellers know about… (presumably). I would not hesitate to say that many standard resales most likely would have some sort of elevated spore sample counts, or perhaps not entirely level slabs. My point is not to diminish these problems in REO properties but rather to approach the process with a more standardized methodology regardless of the source of the sale. What differs obviously is the timelines for contingency which is brutal right? Trustee sale you have 0 contingency. REO you usually get a 7 – 14 days. Short sale and standard resales you generally have 17 days. These are all just generalizations on the timelines but I think you get my point.
zk – For a trustee sale you can certainly hire inspectors to check out the items you mentioned. The challenge is accessibility. If the home is still occupied by the seller then you are good to go. Offer the guys some bucks and set the inspections up. If the home is vacant then it is more challenging to get in.
Honestly guys, while disclosures are helpful… I am just not sure how much stock you can put in them with regards to detecting everything. If a homeowner had a faulty windows and over time moisture got into the framing and mold built up that seller would more then likely never know. Again, this is not to diminish the importance of the disclosures but rather to stress the importance of your own diligence.
