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Why Buy Trustee Sales?

michelle — Mon, 07 Mar 2011 14:00:23 +0000

What is a Trustee Sale?

When a property goes into foreclosure a “trustee” is entrusted to try and resell the property and recuperate losses. The property can then be sold at auction by the trustee. This is considered a trustee sale. Trustees can be various entities but are typically law firms hired by the lenders who foreclosed on the property. A sale date for the property is a matter of public record and once established by the investor, can be found in a local newspaper or provided by the lender. This can also be found by searching the property title, once the date is established and published. Like other auctions, the property can be assigned an opening bid, although this is not always the case. The lender determines the opening bid, when there is one, and it will at most start as the outstanding amount on the mortgage loan, but it can also start at less. When bidding on properties at auction, be sure that you’re bidding on a first mortgage, if there is more than one.

Why Should I Purchase One?

The best way to take advantage of a Trustee Sale is to target properties that have an initial bid lower than the estimated value of the property. Nothing like buying a home in today’s market that comes with equity! One thing to remember where Trustee Sales are concerned is that they are cash deals and traditional financing is unavailable due to time constraints. In Arizona, a cashier’s check is required in the amount of $10,000 payable to the trustee in order to place a bid. If you are the successful bidder, the balance is due with a cashier’s check by the following day at the place of auction. You then become the owner of the property. There are however, “Hard Money Lenders” which borrow money based on the property rather than the person. There is typically a 20% – 30% down payment required in these cases and the lenders charge a higher rate for this service.

The Key

There are often substantial profits to be made with Trustee Sales, the key to buying here is to take your time and do your homework. If you’re able, check out the property (although time constraints may make this difficult). By being educated and prepared, you can become a lucrative real estate investor in a very short amount of time with Trustee Sales!

Why Buy Trustee Sales? is a post from: Phoenix Foreclosure Auction List