“What do you think of buying a home at a foreclosure sale down at the courthouse?”
Answer:
For sophisticated investors, it can pay off well. However, there are many very real risks and downsides to buying at a trustee sale:
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1. All sales are 100% final the moment your bid is accepted.
2. Sales are As Is with no inspections (unless the property is vacant and open and you trespass to enter it)
3. There are absolutely no contingencies.
4. You can’t get a mortgage to buy the property. You must bring cashiers checks to the trustee sale and pay immediately once your bid is accepted.
5. Sales are subject to existing liens and encumbrances, so a title search is necessary to help assure (but not guarantee) that you won’t inherit any liens.
6. If occupied, you would have to evict the occupant.
7. Occupants could damage or steal from the property before moving. For example, I’ve seen people pour concrete down the drains or take the kitchen with them when they move.
If you want a foreclosure, I advise clients to buy after the bank has foreclosed and eliminate all these risks.
If you still want to try it, you may make some money, or lose some.
Good luck.
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