Alameda County Auction VS Norwalk

[Purnell C.]

I purchased a property at the steps of the Norwalk court house in the past and the process was seamless.  I showed up, waited for the bid, no one bid against me, I paid in full.  I went to the recorders office and that was it.  

For Alameda County, the website indicates you need to sign up with the auction website but I am confused about one two things:  When are the auctions held and can I show up if I am not bidding?  (I'd like to observe how it's run before signing up.)

[Brian Burke]

@Joo Park, oh, let me count the ways!  The two biggest risks are the condition of title and the condition of the property.

The condition of the property is an obvious one and is a risk with any purchase--but in the case of a trustee's sale, you don't get the benefit of inspection reports...heck you don't even get the benefit of seeing the inside of the property in most cases.  So there could be all sorts of hidden damage.  Easy to mitigate--just apply a big rehab budget.

The less obvious one is the condition of title.  Think of it this way: at a trustee's sale you aren't buying property, you are buying title.  And you get whatever title is held by the foreclosing lender.  If they are a first-position lien, you're probably in good shape.  But if the foreclosing lien is a second, or if there were senior judgment, tax or other liens, you'll have to satisfy those liens. 

The reason that the title risk is less obvious is that title is complex and the position of the foreclosing lien isn't always obvious.  There could be subordination agreements that change lien priority, or remaining loans from the previous owner that are still attached to the property, or a series of conveyances where the senior obligation is in someone else's name and if you don't know what you're doing you can easily miss it.

I've lost count of how many times I've watched someone buy property at a trustee's sale just to have their entire purchase price wiped out because there was a senior lien that exceeded the market value of the property, making the title they just bought worthless.