Auction.com 101

[Alison Hallifax]

Hi all. I'm totally new to this, so please excuse my potentially dumb question. I'm interested in purchasing an investment property at auction and have been looking at auction.com quite a bit. There's a starting bid price, then there's the "unpaid balance" amount under that. If I purchase the property at auction, say from the trustee/ #1 position lien holder, am I liable for that unpaid balance amount? I'm assuming I'd be liable for the 2nd or 3rd mortgages as well? Also, I would be on the hook for any HOA, mechanical and tax liens too correct? Appreciate the education and clarification.

[Jassem A.]

You would want to do a title search but if the trustee sale is on the 1st and there is a 2nd then you'd be liable for 2nd and any other tax, mechanic or IRS lien. You may also have to evict the previous owner or tenant or work out an agreeement. In my area I think you will get a better deal if you go to a trustee sale at the courthouse steps than you would trying to bid online where they won't even tell you what the reserve amount is. If you go to one in person, the minimum bid is the reserve amount (you won't know the minimum bid until you show up and ask the auctioneer). The one I went to yesterday, the amount owed was 235,000 and the minimum bid was 94,300. I was the only one that showed up. You will need to bring a cashiers check made out to yourself for 10% of your offer and then you would have 15-30 days to pay the remaining 90% if you win the auction. If no one bids, the property gets transferred back to deed holder and becomes an REO and at that point it will likely be listed on the MLS and could sell for more or less than what you could have paid for it at auction.