Buy real estate at creditor auctions

Can I buy at creditor auctions?

Creditor auctions are excellent opportunities to buy real estate at bargain prices. A wide variety of creditors sell property at auction in order to collect their money. Some examples include:

lender foreclosures;
unpaid property taxes due to the local government;
IRS and state income tax liens; and,
persons and companies that win a lawsuit and obtain a money

judgment against the defendant, but are unable to collect their money in any other way (these are called judgment creditors).

How do I find out about upcoming auctions?

Call or visit the place in your county or parish where deeds are recorded. Ask someone there about the local procedures leading up to a creditor auction. Usually, the creditor must publish a notice in a local newspaper of general circulation in the "Legals" section of the classified ads. This could be the paper you read everyday for the news and sports scores. Or, it could be a specialized legal newspaper devoted to just this sort of thing. Other times, creditors must record something in the real estate records, advising that they will auction the property on a certain date and time. Someone at the courthouse can give you guidance.

What are the dangers of buying property at creditor auctions?

You have all the typical risks associated with buying any property. We will not go into those here, because they vary so much depending on the type of property. There is another risk, however, that can lie hidden and deadly for many years. A creditor auction could give you title to the real estate, but other liens, mortgages, and claims might still be on the property! In other words, another creditor of the former owner might be able to take the property away from you and pay you nothing. The rules change from state to state, but as a general rule, if any creditor on the following list sells property at any auction, every category above that creditor still has a lien on the property.

Person or bank holding liens for real estate taxes
Co-owners who did not also owe the debt (including community property claims)
Person or bank holding first mortgage
Person or bank holding second mortgage
Mechanics' and materialmen's liens. These might come before the first or second mortgage, if the work was started or the materials delivered before the mortgage was given.
Judgment creditors and general tax liens, depending on the order in which they were recorded. Those recorded earlier than the one holding the auction remain as liens on the property.

IRS liens might also cause trouble unless the creditor followed some very specific procedures regarding giving notice to the IRS or joining the IRS as a party in a judicial foreclosure. Those tax liens might continue against the property unless the proper IRS technicalities are followed.

1. Things to Know Before Selecting an Apartment
With so many people wanting to live in the city, it is difficult to find an apartment, especially in big cities like New York City. Apartment prices are rising. Even if one...

2. Real estate Investments
Real estate, also named immovable property, is a legal concept that includes and defines a certain section of land along with anything permanently affixed to it, su...

3. Cancun Real Estate Investing
Are you trying to decide on a great Cancun Real Estate investment opportunity? Do you sometimes feel overwhelmed by all the possibilities out there? If so, take a minute t...

4. Investing In Commercial Real Estate
Investing in commercial real estate is treated as capital budgeting by using state of the art investment analysis, which integrates the flow of income it will generate and ...

5. Start Investing Money in Real Estate
If you’re not investing money, you may actually be losing money and net worth in the long term. In the past, a secure, well paying job was enough. Workers generally h...

6. How to Benefit from a Real Estate Investing Book
What information can you get from a good real estate investing book? There are a number of online sites, which can impart you knowledge and tips on how to start make your r...

7. Profitable Commercial Real Estate Investing Introduction
The term commercial real estate means real estate assets that are used for business operations. Commercial real estate can be leased or owned. Commercial property may inclu...

8. How Winning Real Estate Investors Avoid Fear
How Winning Real Estate Investors Avoid Fear Fear in the market is causing many would be investors to not take steps that could improve their lifestyles and retire...