by admin » Thu Sep 04, 2008 12:47 pm
yea, just because something is up for auction, does not mean the title is clean. There are a lot of risks to buying at auction. All kinds of strange deals and under the table contracts go flying when properties are in trouble, as owners try to save their rear end at the last moment. It is not for the faint of heart, and I really would not recommend it to someone that does not have cash to burn. It is not something you put your nest egg in.
I have the resources to do this on hand, and I would never venture much more than my pocket change at auction. When we deal with auctions for clients, we park one of our law students at the court house with a sleeping bag and a cell phone for days to follow all the paperwork through the system. When we are tracking a particular property, we also spend a lot of time coordinating with the banks or creditors involved behind the scenes, talking to the owner, and anyone else that might tip us off about what is really going on. For example, did the owner sign some last minute contracts on the property, or use it to secure more debt? Who else is getting burned by this default?
That does not even touch the standard problems that apply such as conducting the normal title search, finding out if the property is even something you would want to own, and so on. Just because you say can pick up a property for say 30% less than the market price at auction, does not mean that the property is really worth that. There are many times other reasons the owners let the bank or creditor have it, such as the place needed to be torn down.
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