Trustee Foreclosure Sales
I am not a foreclosure expert, but I have received training from Alain Pinel Realtors that empowers me to represent buyers of distressed properties.
As I have previously noted on this blog, Saratoga, Monte Sereno and Los Gatos are now experiencing some distressed property sales, but they are generally random (in terms of neighborhoods and price ranges) nor do they dominate most neighborhood markets.
From Google searches I receive phone calls from potential buyers interested in purchasing homes for investment in Saratoga, Monte Sereno and Los Gatos. In particular, Sunday I received an inquiry from an investor about a home on Saraview Court in Saratoga – it was already scheduled for a trustee foreclosure sale on Tuesday. It was too late to mobilize for a purchase, but I was curious about the process so I attended the auction and videoed excerpts of the proceedings because I though my readers would be interested. Perhaps this will help make clear that trustee foreclosures sales are not an easy arena for making a quick buck. You may choose to focus your search on standard listings or REO (real estate that is already owned by the bank), as these transactions are more likely to close escrow.
In this video you will hear the auctioneer’s clear disclaimers about the condition of a property and the buyer’s lack of assurances of even clear title; cash is king if you want to play this game.
There is a sad and unfortunate story about every distressed property sale. One of the auctioneers Tuesday asked repeatedly not to be photographed (a request I honored), not because he was “wanted by the law”, but presumably because he did not want to be the focus for displaced anger of someone whose home was sold at auction. The Saraview Ct. property is part of an very unseemly tale of the destruction of greed and even murder. This is not genteel real estate.
One point I hope that the video makes clear is that most foreclosure trustee sales are usually redeemed by the second trust deed holder if they think they have sufficient investment to recover. When the auctioneer said that the property was “sold” on the court house steps for $884,904 ($1 over the opening bid price) this really means that the second TD lender was merely trying to protecting their interest to eventually recover a portion of the amount they had loaned on the property. The property is still subject to the $1 million encumbrance for the first TD lender! Even though this property was “sold” to the second trust deed holder the initial first trust deed obligation remains, so the eventual REO list price is likely to be the sum of both, not the “sold” price.
The second point is that the foreclosure process (including attempted short sales) is typically frustratingly long and unpredictable. The process often extends beyond the three month statutory minimum. The closer an attempted short sale is to the foreclosure date, the less likely it is to close escrow. Over 100 properties scheduled to sold at auction on Tuesday were canceled or delayed! This video shows just a condensed, edited snapshot of a auction process that took place over 40 minutes. There were several other private potential bidders there, but were effectively shut off by the second TD lender’s winning bid. If there were other active bidders it could have taken hours.
Most Realtors don’t plan to make a habit of attending trustee foreclosure sales in the future; I suggest you might not want to do so either. There are other more effective ways of purchasing a good real estate investment – that’s what I specialize in!
Related articles:
- Trustee Sale vs. Judicial Foreclosure (mortgagesloans.suite101.com)
- Foreclosure – Short Sale – REO – Bank-Owned – What’s the difference? (teachstreet.com)
