The Myths of Buying at Auction
1) You can be liable for any outstanding or unpaid property taxes and junior liens.
WRONG: All property taxes and special assessments are included by the trustee in the published minimum bid.
2) Buying at auction also comes with the possibility that the former owner will exercise their right of redemption by coming up with the cash to buy the house back within a certain period of time.
Wrong: All foreclosures (in California) are non-judicial proceedings. There are no rights to redemption.
#3) The IRS has 120 days to redeem the property if back taxes are owed:
Legally True, BUT Practically Wrong: Legally true BUT: Once a property goes to sale the IRS pursues the delinquent taxpayer/owner 99% of the time—not the property.
The Truths of Buying at Auction
1) You may not be able to inspect the property.
2) At the Trustee’s Sales, all bids are in the form of cashier’s check and immediately payable. There are no financing or contingent offers.
3) You will have to evict the residents.
4) Residents will need to be paid to vacate the property.
5) If residents are not compensated they will strip and/or destroy the home.
6) You will have little, or no, (practical) legal recourse against these deadbeats.
Protect Yourself from Fraud
by Doing your “Due Diligence”
* Using a title insurance company, order a "prelim" to research the condition of the property and any existing debts such as liens, unpaid taxes and previous construction debts.
* Ascertain any land use problems such as zoning or toxic waste issues.
* Familiarize yourself by attending other auctions ahead of time.
* Don’t get caught up in the exciting ego experience of outbidding other auction attendees. Decide what your maximum offer will be and don’t go above that dollar amount.
