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Agent: What to Expect at a House Auction or Trustee Sale

Some people have entered the market to buy a foreclosed home. Here's some information on what to expect if you want to buy one.

Foreclosures have become an unfortunate part of today’s housing market. Newspapers and websites highlight the number of foreclosed homes in their communities and economists chart the effect that foreclosed homes have on decreasing home values.

With so much attention, it is not surprising that there is an increased interest in buying these properties at auction or a trustee sale. At one time, investors were the prime buyers of foreclosed properties. Now, with everyone looking for a “deal,” individuals have stepped into the market.

But, buying a foreclosed property involves more risk and a lot more research than buying other types of properties. It is wise to understand the process before committing to a sale.

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In King County, trustee sales take place in two locations, the King County Courthouse in Seattle and also outside the offices of Northwest Trustee Services in Bellevue. Trustee sales are open to the public and are held outside so that the general public can attend the auction. They generally start on Friday at 10 a.m. unless it falls on a legal holiday. Anyone contemplating purchasing one of these homes should attend one or several of these auctions to see how they are handled before having a vested interest in the outcome.

Bidders must bring a cashier’s check for the entire amount that they plan on bidding. This must be shown to the auctioneer before a bidding number can be assigned. It is wise to divide the amount into several checks so that you have the option to bid higher or lower than expected. The auctioneer does not use a microphone so it is necessary to pay strict attention or a sale could be finalized without much notice.

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Now that sounds easy. Just bring the check and start bidding. Unfortunately, if you are not prepared and know your risks, you may be getting into more trouble than you expected.

The first step is to find which properties are scheduled to be sold. The trustee must post a notice of foreclosure 90 days before the sale and publish a notice twice, once between the 35th and 28th day before the sale and again between the 14th and seventh day. These can be accessed online on the trustee’s website, King County records or you can work with a Realtor if the home is listed.

Next, you need to determine which homes are good investments. A Realtor is helpful in determining the value of the property based on similar homes. Very often these homes are occupied and you will not have the opportunity to inspect the property to determine repair costs. Homes in foreclosure typically have deferred maintenance which adds considerable risk in determining what is a good investment. You will need to purchase a copy of the title report from the trustee to look for liens or other recorded problems. You will need to know what added costs will be required after the purchase such as who is responsible to pay outstanding utilities, tax liens or home ownership dues.

After doing all of the research, the sale may not happen. The owner still has up to 11 days before the sale to pay the monies owed and the trustee could postpone the sale for any number of reasons. It is not uncommon for most of the homes scheduled for sale to be delayed. The owner also could delay the sale by declaring bankruptcy. Without last minute information, acquiring the funding may prove problematic.

There are many more pitfalls in buying a home out of a trustee’s sale. To help facilitate a sale, there are companies that do all of the work for you and even represent you at the sale. For a fee, companies such as Vestus will educate you, do the research and help you secure financing. It is a small price to pay for the confidence of acquiring a property at a reduced rate without any fear of surprises or complications that may prove costly.

Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales.

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