Buying Foreclosures at Trustee Sales / Courthouse Steps Auction in Georgia – Early Learnings
I have been investigating and starting the initial steps of buying foreclosed homes from the courthouse steps, also know as Trustee Sales in other states. In Georgia, this sale happens the first Tuesday of every month in every county. Literally every property is “cried” out by a representative of the law firm that is handling the foreclosure for the entity exercising this option of collecting its debt. Properties are cried out at the initial offer price established by the lending institution that owns the debt. In past, this starting amount would always be the loan balance amount added to attorney’s costs. Most recently, banks are starting the initial bids at lower than the loan balances realizing that they can cut their losses by moving the property many months earlier at the auction rather than foreclosing and letting an REO broker list and sale through traditional means.
The bank always makes the opening bid. Other bidders may then bid against one another. The highest bidder will win the sale.
There are some important things to keep in mind when buying at Trustee Sales.
(1) You must have Certified Funds at the courthouse in order to bid.
(2) Liens may still be present on these houses; property tax and federal tax liens are the most common still present as these do not get wiped out in foreclosure…. Be careful!
(3) When you leave from the sale, your cash is gone, but all you get is an auction receipt–NOT A DEED! It usually takes 30 to 90 days for your recorded deed to make it to you. In some cases the foreclosure may have been stopped by a bankruptcy, which means they will send your money back at a later date. This also means you may not be able to sale if you are considering a quick flip.
(4) These properties may be occupied. They could have a tenant from the former owner or the former owner may still be there. This can be tricky. In 2009 Congress passed a bill to protect tenants of foreclosure. If they have a valid lease, they may have rights to stay as long the life of the lease if in good standing. You may have to evict to get the property vacant. Be careful on this one too….
If you are comfortable with all of the risks of buying at the court house steps foreclosure auction, it could be a great opportunity. Make sure you are working with an experienced broker when investing in Atlanta, Georgia or any other market. Always remember that real estate is a local business and not to be done by non professionals out of state that have not done some serious home work on our market.