With all this foreclosure talk in the news these days, there are certain terms that start to sound as familiar as the chirp of your alarm clock each morning. One of the most commonly heard of is the Public Trustee Auction or PTA. A PTA is pretty simple when a foreclosed property is put up for auction. It’s a bleak concept for people who struggle to make their mortgage each month or those who are already behind on payments. If a property owner has reached the point in the foreclosure process where a trustee auction of a home is scheduled, it is usually too late to repossess the property.
However, a trustee auction can be a great opportunity if you are in a position to take advantage of it. At a public trustee auction, foreclosed property is sold to the highest bidder for cash, and often at a deep discount. Typically, the trustee is interested in moving a property quickly and will not expect the type of prices demanded in the market from a seller. Traditionally, prices at auctions were slightly discounted, but with the glut of foreclosed properties saturating the market in many parts of the country, trustees are so eager to unload that they often open bids at incredibly low prices. With homes selling for pennies on the dollar, the real estate investing business has begun to shift its focus to an exciting new path to profit. There is a clear and current way to earn serious money. If you’re in a position to jump on these distressed properties, there’s definitely money to be made. Start keeping an eye out for auction notices posted in the newspaper, and with a little due diligence, jump on the latest game in town.
Given the current economic climate, more and more auctions are taking place and there is money to be made for the savvy investor. But like any other scheme to make money, when it comes to auctioned properties, he needs to know what he’s doing. Foreclosed homes at auctions are offered by buyers who have only seen the property from the street. There is no real estate agent hanging around the front door to give you a real tour of the interior. Of course, this is a rule made to be broken and is regularly broken. Walls are scaled, hedges snapped, windows thrown open, all in an attempt to get a better idea of a property’s condition from potential bidders. The good news is that, contrary to popular myth, most foreclosed properties are not vandalized by their former occupants. The occupants are most likely still there, which can make it difficult to preview the property.
In standard real estate transactions, the seller has to represent the true condition of the property to the buyer under full disclosure. A trustee has rarely seen a property at auction and does not have to give any guarantees to the highest bidder. Caveat Emptor or “let buyer beware” has never been more essential than at a public trustee auction. Skeletons in the closet of a foreclosed home may come back to bite you. There is definitely a lot of money to be made, but before you dive in, do your homework, get to know the property and the market. Oh yeah, and bring cash.
Kevin Roberts California DRE Broker 00858916