search foreclosed homes in San Diego

If you are thinking of buying San Diego foreclosures and flipping houses for profit, you are on your way to making money in the San Diego Real Estate investment market. Finding San Diego foreclosure homes, condos, properties and REO's is easy, we have plenty of foreclosure listings to choose from in San Diego. But, if you are a first time home buyer, or new to the San Diego foreclosure market, you may have some questions regarding the process that takes place at a San Diego foreclosure auction.

Researching the potential bargain

You need to find out as much as you can about the estimated market value of the property, how much is owed on the property and if the owner has any other liens against the property. If there are outstanding liens on the property, the winning bidder at the auction may be responsible to satisfy these liens in some cases, so it's important to check for any liens and the priority of the liens before you bid at the auction. A real estate attorney or title company can check for liens, or you can check directly with county records.

The priority of a lien is usually determined by the date it was placed on the property. So a first mortgage will usually have the first priority, and all other liens will be considered junior liens. In most states, the public auction clears out any junior liens, but there are exceptions such as tax liens, which typically will continue to be in effect after the auction.

The opening bid at the auction is based on the total amount owed to the foreclosing lender and may include fees incurred because of the foreclosure proceedings. If no one bids above that amount, the foreclosing lender will take possession of the property. It's important to know this amount so you can determine if the auction represents a potential bargain purchase when the opening bid is compared to the property's market value.

Determining your bid

Based on all the factors used to determine the potential bargain - and your financial capability - you'll need to determine how much you can and should bid at the auction.

Determining your bid amount is more important in states where bidders are required to bring the full amount in cash or cashier's check to the auction. You won't even be qualified to bid if you don't meet that requirement. If you don't have that type of cash lying around, you have a couple options. If you own a home, you might be able to take out a home equity line of credit, which is a cash loan. If you can't secure a cash loan, you may consider buying a pre-foreclosure or bank-owned property, which usually require only a regular mortgage loan secured by the property being purchased.

It's also important to determine the bid amount even in states where you don't need to bring the full amount to the auction. By setting a firm ceiling for your bid, you'll avoid getting caught up in the heady auction atmosphere and overbidding, which can result in little or no bargain for you. Also, if you're not able to pay the remainder of the bid within the time frame stipulated by state law, the deposit you paid at the auction is often nonrefundable.

A reasonable purchase amount at auction is at least 20 percent below full market value, and much better deals are often possible. Other factors to consider are the rate of real estate appreciation in the area and the potential for increasing the property's value by making repairs and improvements.

Bidding at the auction

Call the trustee the day before or the day of the auction to check one last time if the auction has been canceled or postponed. If an auction is postponed, the trustee should provide the new auction date.

Arrive at the auction location early and locate the auctioneer as quickly as possible. Bidding at an auction can be intimidating, especially if you've never done it before. Take as many cues from the other participants as you can, but don't let them dictate how much you bid. You may encounter investors who attend many auctions every month and who don't necessarily appreciate new competition.

Taking ownership

If you are the winning bidder, make sure you get the necessary documents from the auctioneer to verify that you are the winning bidder. Clarify with the auctioneer and a real estate attorney what further steps need to be made before you take ownership and possession of the property. In some states, ownership can be transferred immediately or within a few days. In other states, you may need to wait a month or more for the sale to be confirmed by a court. Some states have redemption periods for the owner, in which case the owner can buy the property back from you if they pay the full amount paid at the auction, plus applicable fees. You should avoid spending money on repairs or improvements during the redemption period.

If the trustee does not evict the current owners, you may be responsible to do this. If eviction is necessary, you can contact a local real estate attorney or the county sheriff for the proper procedure.

Related Posts