Bidding on auction.com occupied property

[Steve E.]

Hello all,
I am watching this property and the status is occupied, the listing says do not disturb the tenant. Also no title insurance is offered at closing. It is a reo but then I did a title search by the last owner and it came out clear. The house had been foreclosed in 2009 and I drove by it and verified people are still living in it. After foreclosure how come the bank did not evict for such a long time. The comps shows this property at around $320K and the bidding started at $99K and currently at $154K. The reserve has not been reached. I have couple of buyers in mind I can wholesale this.
What do you all think? I am pretty new to auctions and foreclosures. I am worried about the condition of the property and what will it take to evict the current occupants? With these unknowns how much max should I bid?
Thanks

[Steve E.]

Rob K and Eddie P., thanks for sharing your experiences and it has been very valuable and I am going to follow Robert Steele 's advice since he is in my neck of the woods. Thanks Robert.

[Rob K.]

Devon McLaren or Peter Chevalier, Thanks for posting, but you didn't address anybody's concerns. You just put out an infomercial for your company. Why are you issuing quit claim deeds? Why no title insurance?

When I purchased from your company before, I received a warranty deed (might have been a covenant deed) and title insurance.

[Joshua Dorkin]

Devon McLaren - You signed your post "Peter Chevalier" --> Which is it? Are you Devon or Pete?

Otherwise, as Rob K already said, you didn't address any of the posts in the thread. Was you point to promote the company? The only place for ads here on our forums is in the Classifieds area. You're certainly welcome to address feedback and concerns of our users by responding here, but you can't use this thread for ads -- that's why your post was edited.

The best way to build your brand with our users would be to respond to people's questions with direct answers. I hope you'll (if there are two of you, please consider creating a profile for Peter to reduce any confusion you've already created) jump back in to help these guys out.

Thanks!

[Steve E.]

Joshua Dorkin, thanks for jumping in.

Devon McLaren, if you want to make a statement be an active poster here or register your company under the company profile. If you are trying to promote your company this hurts more than not posting, what I mean is first posting.

All,

The properties I was watching, all of them did not meet the reserve but went under Bid Pending Confirmation. I wish well to the winners of the bid and hope things work out for them.

[Eddie P.]

@Steve. I could not resist and entered a bid on 2 properties here for an amount I was comfortable with. I did my due diligence as if were a trustee sale.

On one property the reserve was met and the price shot up within the last 20 minutes $35,000 more than I was willing to pay.

The second property I was outbid and raised $5000, ending up the high bidder. The reserve was not met.

Within 15 minutes I received a call telling me I was close to the reserve and they are going to process the contract and submit to the bank, BOA. The agent told me there was a 75% chance they would accept.

When I inspected the property, the neighbor informed me the owners had abandoned the property over a year ago but that squatters had been removed by the police about 4 months prior. The house was vacant, stripped of central air and appliances, very typical.

I received a 60 page e-contract within 30 minutes of auction close which I have forwarded to my attorney. They pressed me to have it back within 2 hours, I said no way until my attorney reviews. On Tuesday they are expecting $14k escrow by wire, again, no way until my attorney reviews and runs a full title search and reviews the file at the courthouse.

Enclosed in the contract was a schedule A title report. There is a $2000 lien holder they
did not give notice to in the foreclosure, I guess I will have to settle if this goes through.

Like I said in a earlier post, I don't see any greater risk in this than buying at a trustee sale. It's actually a little safer since I do have an opportunity to see the property, run a full title search and review the court files prior to sending in the full payment.

I guess if it doesn't look good I will walk and lose the $2k deposit I left on my credit card.

[Brian Burke]

I was interested in 9 of them. Got outbid on 6 of them (by over 100 grand on one of them!) and was highest bidder on 3. Reserve met on two, reserve not met on one.

Of course I ran my own title on all 9 prior to bidding, treating them just like a trustees sale. I don't see much difference between the quitclaim deed and a trustees deed upon sale.

My legal-to-English translation of the purchase contract is "we won't guarantee anything, we don't know anything, we won't pay for anything, good luck."

Now I'll wait to see if the "reserve not met" deal gets approved...

[Account Closed]

Originally posted by Eddie P.:

I am dealing with a purchase now where the underwriter will not issue a tittle policy because on a previous transfer of the property the notary, witness and the seller had the same, very uncommon, last name.

Eddie, try to push that through a different title company with a different underwriter. First American for example is HORRIBLE to deal with when it comes to foreclosures and writing a new policy. I don't think they will even write a policy on anything with taylor bean and whitaker involved. Not to say i blame them, but it causes headaches. Other underwriters are a little more, umm liberal. I've had deals slam into brick walls over lame paperwork issues 15+ years ago and 3 sales back, moved the deal and life was fine again.

Or track down the original owner and have them sign whatever the underwriter needs. If the name isn't common you should make short work of finding them.

[Steve E.]

@Eddie p, nice and good for you. I am sure it will work out for you?

@Brian burke, thanks for sharing.

Good luck to both of you and keep us posted.

[Devon McLaren]

Rob K, Joshua Dorkin and Steve E. thank you for your concern. Unfortunately Auction.com was unable to make a company profile, however, the contact info given in my previous post was correct.

Unfortunately my last post was edited by the moderator and all valuable links were lost.

Peter Chevalier, Director of Customer Service at Auction.com, is the best person to contact with your concerns. He can be emailed via [REMOVED].

Thank you for your understanding.

[Joshua Dorkin]

Devon McLaren - You guys do have a profile --> http://www.biggerpockets.com/co/auctioncom - but in order to post on our forums, you need an individual user account. Company profiles on our site can be used to post status messages and connect on our dashboard or for posting a blog post, but companies just can't interact on the forums.

If you're not the best spokesperson for the company, perhaps Peter should set up an account so he can better answer any questions or concerns of our users?

Your last post didn't answer any questions -- it just pointed people back to your site.

Hopefully Peter can jump on board to help out.

Thanks, Josh

[Eddie P.]

Brian Burke Wondering if your "subject to" offers were accepted. Mine was and we closed yesterday.

I tried to get them to issue a Warranty deed with title insurance with no luck. They did say they would give a discount on the title work if I did the closing with them upon resale.

[Brian Burke]

Eddie P., between that weekend and the following two weekends, I ended up as high bidder on 10 properties. I met the reserve on only two of them.

So far I have closed on all three from my last post, and four other "reserve not met" bids were accepted. I'm still waiting to see if my bid will be accepted on three.

[Eddie P.]

That's great.

Glad it worked out for you as well.

[David Ostrow]

I have a parallel question to steve e.  I am looking at a property on auction.com. it is an "occupied property"  I have done the title work and it looks like I will get a clean title with the exception of the occupied status.  

There is clearly no one living there.  The house is not locked. We were able to go in the front door. There is no electric on.  The house is a mess, no biggie. The house has all kinds of garbage and remnants of the prior owner there. A Tv, garbage, boxes of stuff, no furniture, some tools, etc.  All appliances are in place but getting rid of them as a part of the reno.  I am sure you get the picture and have seen this before.  

I am told by the Auction.com closing staff that I will need to get an eviction order to get the title fully clear.  OK  no problem.  If no one is living there and no one knows where they are, how does that work.  The neighbor (an member of my church) has told me that they have not lived in the house for many many months. She also told me the chain of ownership that matches the deed recordings at the county.  I will clearly talk to my attorney but wanted some guidance.  This property is in Pennsylvania. 

Any one have any ideas on how to handle this?

Thanks for your help.

dave

[Brian Burke]

@David Ostrow , check with your attorney for specific legal advice. That said, if it were me and I'd talked to my attorney already, I'd take possession of the house upon closing and change the locks. I'd base that decision on the totality of the circumstances...that being lack of food and clothing inside the residence and statements from the neighbors.  Laws in your state may not support this position, so don't do it until you've cleared it with counsel first.

[Faun Kime]

This thread reads like a novel to me as I'm up against a similar situation.  

I'm in Los Angeles, CA and I'm looking to bid on an REO on the auction site "HomeSearch." It's occupied by the children of the deceased former owner...and perhaps all their high school buddies as well. It's a rather intimidating looking crew to even drive past. There are lots of them and they have VERY nice cars for congregating around this virtual tear down. Hmmm...drugs? I'm not sure and as usual, there is very little info.

Does anyone have any thoughts about how much of a battle evicting descendants of the deceased, foreclosed upon owner and all of their friends (think Boyz 'n the Hood)???   

[Brian Burke]

@Faun Kime, legally it's not all that hard. Be sure to have an attorney that has eviction experience help you.  It's not an easy process if you try to do it yourself.

Practically, it's not that hard either...just stay out of it and let the process server and Sheriff do their thing.  

Now the hard part...don't expect the house to look as "good" as it looks today after the boyz are outta the hood.  And don't expect that they'll never return to the hood after they are evicted. Finally, consider leaving the shiny new appliances at the store when rehabbing the house...I've seen a number of those grow legs when doing houses like this.

[Faun Kime]

Thanks @Brian Burke !  I'm almost less concerned about legally evicting them than I am  about what illegal things may happen afterwards.  It's a rough neighborhood!

That said, it does seem like quite a process getting them out,  which could take a month or so!?

If I get the property, I'll keep you posted.   Thanks again for your thoughts!

[Jennifer Hollstein]

@Eddie P

you mention you

crossed referenced them on the clerk of courts site. 1 was still in the owners name, so it might of just transferred, 1 had foreclosed Jan 2011 and no writ of possession was ever filed. 1 was foreclosed 8/2011 and had a writ that had been issued and rejected with the comment "3rd party entitled to stay". The last 2 are well past the year if they were tenant occupied and the "act" applied to them.

i am in NJ so not sure if there is a similar site but where exactly are you finding the information that states if there was a writ of possession issued and or note that party was entitled to stay?

Thank you

[Andrew Holmes]

Auction.com is like a lot of the other sites. The starting number really does not mean much. I believe in the last 4 years we have purchased about 72 or so properties from them so I don't have any complaints. 

Just like with any other auctions be careful and keep a wide margin specially if the property is occupied. This is specially true if the property is in a county like Cook county or it can be even more scary if it is in Chicago. 

The city of Chicago has some very unique challenges when you buy a property with an existing person in it specially if they are tenants. If they have an bonified existing lease by law you have to pay them $ 10,500 to move if you want to break their lease. 

Yes $ 10K. I know it's shocking but as per the Chicago ordinance if they are not aware of this you are obligated to tell them their rights. 

In the suburbs it not as crazy but buying in some counties can be pretty crazy depending on how easy or difficult it is to get people out. If you going to invest on a large scale at some point you will have to deal with these things if you happen to be in one of these areas. Still every time there is a problem there is an opportunity on the other end of the problem. We have done very well with auction but I say that they are all home run deal I would be lying. There have been goofs so please do your homework. 

Auction.com can yield some great opportunities if you are persistent and if you do your homework. Make sure you are familiar with the game. People will bid up the property and then realize that they got up in the moment. Properties on these auction keep coming back over and over. We have won properties after bidding on them as many as 15 different times so be patient. This is a game of nerves and your greed can kill you so let it go if the number go beyond you pre set limit. 

Andrew.

[Voi Vo]

home was foreclosed but i was never evicted. I am still living in the property. can i grant deed to myself?

[Joseph Profaci]

Originally posted by @Eddie P.:

Buying with a quit claim is similar to buying at the court house steps. You assume all liability and must do your due diligence and look for any issues which might affect title. Besides the obvious mortgage and creditor liens, I also check utility liens, building and code violations, IRS liens, and prior year taxes.

The interesting thing is the properties I checked, were all foreclosed on a year or more ago. Some are empty even though the auction says occupied.

Earlier this year I bought a property at the trustee sale for $170,000, I thought I had been thorough with my research. I sunk another 25k into it and listed it. The closing agent called me 2 weeks before closing and told me there was a superior lien outstanding for $200k from 5 years prior. I could barely breathe from the thought of this.

After a few sleepless nights of research it turned out to be an unrecorded satisfaction of lien from when the previous owner refinanced. It took 6 weeks to straighten this out since that bank had gone under, the bank that took them over had gone under and not even the FDIC knew who would need to record the satisfaction or who even held the file.

Eventually it was resolved, but I am very cautious and run title searches before paying the balance.

I am dealing with a purchase now where the underwriter will not issue a tittle policy because on a previous transfer of the property the notary, witness and the seller had the same, very uncommon, last name.

Where do you typically look for the liens in this category (utility liens, IRS liens)

Thank you and have a nice day

[Phil Z.]

I didn't read all the replies, but keep in mind these are rarely 'absolute' auctions and the seller does have a reserve price.

As far as selling occupied, it gives the servicer an option to sell at less-than traditional terms with no strings attached.  

Sometimes it takes them months or years to evict an occupant.  (It's funny b/c I have one bank that can consistently evict after foreclosure within 2-3 weeks, were most others take months/years).