How can I go into a foreclosure home and look inside it before the actual auction?

Question

How can I go inside and see a home that is going up for foreclosure before the actual auction? I hate biding on something that you haven’t seen the inside of. I am thinking about knocking on the door and offering the owner 50.00 cash to let me look around. What have they got to lose? What do you think and do you have any suggestions?

Am I better off doing a title search on my own or should I hire a company to do it? Will a title company be able to uncover things that I may not be able to do on my own?

Answer 1

Until you buy the house at auction , that house belongs to the former owners.

A house in foreclosure is not being sold voluntarily. The owners of that house are opposing the sale.

Often foreclosure is an extremely hostile process. The homeowners will not be pleased to see you. You do not have the right to inspect their property.

If you try to inspect their property without their permission they can have you arrested for trespassing. If you are lucky that is all they will do to you. Many foreclosures get so hostile that you are risking physical injury to yourself if you contact that homeowner and ask to inspect their property because you plan to bid on it at the foreclosure sale.

From the property owners perspective you are vulture out to profit from their misfortune and steal their home from them.

When people think that you are tryiing to steal their home from them they can become very nasty. It is not safe for you to be on the property.

One of the big risks of buying property at a foreclosure auction (trustee's sale) is that you get no guarantee of title, you get no title insurance. You must pay all cash in the form of cashier's checks, and there are no refunds.

Also there may be other liens ahead of you . All you get is the lender's interest in the note.

You need much more experience and education before you start bidding on properties at the trustee's auctions of foreclosed properties or you will lose a great deal of money.

Just to give you an example os some of the things that can happen to you at trustee sales.

Recently I attended a trustee's sale in San Jose, California.

The property was a small condominium with a fair market value of approximately $350,000 in good condition. The first loan against the property was $345,000. the second loan against the property was $80,000.

The second loan was the one that foreclosed first. The second loan is the one that was being sold that day. The trustee opened the bidding at $20,000 for position of the second loan. (note: the trustee does not tell you what position the loan is in. It is your responsibility to determine that from your own research) A young man bid the $20,000 amount and paid the trustee $20,000 in cashier's checks for the rights on the second lien holder.

I was initially rather surprised at this, because I knew the young man would have to pay off the holder of the first $345,000 to obtain clear title to the property. In effect the young man was paying $365,000 for a property that he could have purchased for $350,000 or less.

There was just one problem. the young man did not know that there was a $345,000 loan ahead of him because he had not searched the title at The County Recorder's Office. He thought that he had just purchased a $350,000 condomimium for $20,000.

Several weeks later the holder of the first trust deed on that property was scheduled for the trustee's sale. There were no bidders at $345,000. The holder of the first position bid the amount of their note which was $345,000. In the process, The interest of the young man who bought the interest of the second loan loan holder at the trustee sale deveral weeks earlier was extinguished.

Essentially the young man who thought that he had bought a $350,000 condominium for $20,000 really had bought a worthless piece of paper for $20,000 in cash and had no right to a refund.

Before you start putting your cash down at foreclosure auctions you really need to learn what you are doing. You need to learn how to search a title atThe County Recorder's Office so you know how many liens are out there and what position that they are in.

I recommend that you attend a few foreclosure auctions as an observer. I recommend that you go to your County Recorder's Office and learn how to do title searches.

Title searches are not easy to do and it is very easy to miss liens against the property unless you really know what you are doing.

(edit) the people who say the you can inspect a property in foreclosure prior to a foreclosure sale or get the Sheriff to let you have access to the property have absolutely no experience with trustee's Sales.

The rules for trustee's sales or foreclosure sales are very different from the rules that you are accustomed to when you buy a property from a willing seller who wants to sell the property.

If you get a trustee's deed becuase you are the successful bidder at a trustee's sale, then you can get the former owners evicted. Only then will you get access to the property.

Also, some responders seem to have confused the actual foreclosure sale with an auction of properties that the lender got back at the foreclosure sale because there no bidders willing to bid higher than the loan amount of the lender.

These are not foreclosure sales. These are sales of property that the bank got back at the foreclosure.sale.

The lender does not give you any special deals on these properties. If anything they are overpriced for what they are because they usually have had a great deal of damage done to them.

The lender sells these properties for as much as the lender can get so that the lender can recoup some of their losses.

Also, in most cases the reason that the bank gets the property back at the foreclosure sale is because they loaned more money against the property than it was worth. The bank wants as much as it can get to minimize the losses to the bank.

The reason that people buy properties at trustee or foreclosure sales is because occasionally you can get a property at 70% or less of fair market value.

But you really have to know what you are doing.

You do not get the right to inspect the property before you buy it.

You have to evict the former owners of the property if you are the successful bidder.

Also the former owners of the property are often quite hostile because they think that youstole the property from them, and destroy the property before they are evicted.

Buying a property at a foreclosure sale is a high risk business and you must know what you are doing. Otherwise you will lose a great deal of money.

(edit to asker) Yes, if you do not have a great deal of experience doing a title search, yes, I recommend that you work with a title company to search a title for you when you find a property that you plan to buy. That will cost you some money, but it will save you from some huge losses.

I recommend that you become an expert at searching titles yourself. A good way to start is at the County Recorder's Office. Search the history of some properties that are coming up for sale, and attend the sale as an observer first. Also ask the title company for some recommendations on how to improve your skill at searching titles. Then once you have some expertise at searching titles, select one or two properties that would like to buy and pay the title company for a preliminary title report. Tell the title company when you need the report and why you need it, You want the report several days before the trustee sale.

Once you know what the liens are and in what position they are in you can determine the maximum amount of money that you are willing to bid. It is now safe for you to bid.

Since you do not know the condition of the property and there is no guarantee that the current owners will not do a great deal of damage I recommend that you do not bid more than the land value of the property. Consider the structure as having no value.

I recommend that you also talk to an MAI designation real estate appraiser. (An MAI is a Member of The Appraisal Institute. Pay the appraiser for his expertise with respect to the true fair market value of the property and the fair market value of the bare lot itself. You will find that a few hundred dollars spent on an appraiser sho is really knowledgable will save you tens of thousands of dollars.

Also teran_REALTOR below me makes an excellent point in that given the high risk of buying on the Courthouse steps and the very steep learning curve and the time and the effort that it takes to learn what you need to know to avoid making some very expensive mistakes, it is often much safer to buy a property from a willing seller where you have the opportunity to inspect the property and get a guarantee of good title and title insurance.

You can still make money because this is a depressed buyer's market right now. You can get some very good deals in this market right now. In a few years the demand for houses will come back and the property that you bought today will be worth much more in a few years from now when the excess inventory of houses is worked off. You will be glad that you bought your house in this market.

Answer 2

This Site Might Help You.

RE:
How can I go into a foreclosure home and look inside it before the actual auction?
How can I go inside and see a home that is going up for foreclosure before the actual auction? I hate biding on something that you haven’t seen the inside of. I am thinking about knocking on the door and offering the owner 50.00 cash to let me look around. What have they got to lose? What do...

Answer 3

Wow! How did Mike get two thumbs down for his answer? He just educated everybody here on exactly what happens at a trustees sale, and that it is in fact different from when someone auctions their own house.

All that I would add to what he said is this - FEW people are knowledgeable enough and experienced enough to buy at the courthouse steps. In today's market there are plenty of great deals to be bought AFTER the foreclosure auction. Buy a HUD house, a VA owned home or a lender owned home. Your Realtor can help you with it, you get to view it before making an offer or a bid, you can get a title policy and pick out one that you can get a loan on.

Answer 4

Find out who foreclosed on the propriety. The Bank, back taxes, IRS, The City or County? The Sheriff Dept usually is the ones enforcing the foreclosure, get with them and get the information pertaining to the foreclosure, and someone will allow you to visit the propriety prior to bidding. Whoever foreclosed wants to recoup as much of their money as they can. Usually a Realtor can arrange viewing, even if you have to pay a Realtors fee, and I also suggest you have an independent inspection done on the propriety, usually $300-$500 will get you an inspector used to doing bank inspections/evaluations. If your not aware of possible problems, it may not be as cheep as you might want it to be. Start with whomever foreclosed on the propriety. Until the actual foreclosure takes place, there is nothing you can do, and they usually have a grace period to amend whatever the problem is, that resulted in foreclosure.

Answer 5

They often announce open house dates a couple weeks before (and often an hour or so before)the auction where people can go in and look at the houses.

See if you can find out who the auctioning company is, because they may have open house dates on their website. Open house dates may also be listed in local papers.

DO look. Some of the foreclosure houses I have seen are pure crap. And people were buying them at the same price practically as you could get nice new ones.

Answer 6

Talk with your real estate agent about fiscal inspection prior to the purchase of the home. Generally speaking once the home is vacant it is available to show. Just remember that the current owner may also pay off the foreclosure.

Answer 7

go for it ... seems like a sound idea.

as for the bidding -- unless you have been inside and very recently, always assume that the interior is completely trashed and will have to be renovated from the studs out. Figure that amount into your bid (lower the amount you offer to cover the repair costs).

***
Btw, there is no harm in offering the departing people a substantial bonus [like 1,000 in cash] if BOTH

a) you win the auction, and
b) they leave the house clean and in the same condition as when you see it.

sometimes it'll work. maybe it won't. what does it cost to offer??

Answer 8

you are up in knowledge from me i want to know how to attend an auction? where to find out about one? and how much bids are? and if one could just start with payments? instead of a big down payment? like could someone buy an old fixer upper for the amount they pay per month on an apartment in middle range of price? questions questions questions-- without them how did you start?

Answer 9

if people R inside, it would be an insult to their pain....banks do the foreclosures...you can only buy it when the banks take over....then you can get the banks permission to go through the house......the same is true at auctions when the owner does not pay his taxes and you pay it for him...but he has up to six months to pay you back with interest and save his home!!

Answer 10

LOL...
TIP: look under tips and foreclosure ettiquette........unless you wanna get sued up to 5 years later over something really ridiculous,,i wouldnt take a chance, unless of course, you KNOW them!

(Real Estate Wife)

Answer 11

Call the State Board of Realtors and ask if there is a way this can be done legally. I don't think so, but ask.