(Note: There is a sad start to this story, but IMHO the happy ending outweighs it.)
I recently had the pleasure of helping my new clients, Robert & Onelio, purchase their first home at an incredible discount. No, this was not a “fixer-upper” or some shell in a “down and going” neighborhood, but a lovely, recently renovated condominium in Columbia Heights. So lovely, in fact, that they had rented it two years earlier and were the existing tenants when we met.
Robert & Onelio had learned from their landlord that he was going into foreclosure. He even went so far as to give them the name and number of the foreclosure trustee. Nonetheless, when they decided to try to buy the condo early in the process and shoo the wolf from their landlord’s door, he failed to respond to all attempts at contact. Since he still owned the property, there appeared no way to buy it except to bid at the upcoming foreclosure auction. It was at this juncture that their neighbor, also a client of mine, suggested that they call me for help.
Well, even old dogs can learn new tricks, I thought, as the questions poured out. “Do we have tenant’s rights?” “Will we be evicted from our home?” “How does the auction process work?” And the kicker: “Can we really afford to buy it?”
After putting them in touch with Karen Lucey-Guess at Mason-Dixon Funding (klucey@masondixon.com), who helped them through the pre-approval process, I started to make some inquiries about foreclosure auctions. I don’t purport to be an expert by any means, but here are some basic tips from my research.
1) You can find out which properties are to be auctioned at the websites belonging to the auction houses. There are several in the area.
2) The trustee (person selling it on behalf of the bank) must publish the auction in the paper in advance, so check legal notices in the Post or the Times to find out more about the property you want.
3) If you are interested in a DC property, for a mere $4 each, you can download from http://www.dc.gov/ any document available in land records, including the Notice of Foreclosure which will tell you when and where the auction will be, as well as how much is owed on the loan.
4) Go to a foreclosure auction in advance, just to see how things work. Then it won’t be as stressful when you go on “your” day.
5) You must have a certified check to play this game. Each foreclosure notice will tell you how much to bring. Make the check out to yourself.
6) Be on time. Auctions can be scheduled for as few as five minutes each. If you’re in the parking lot or the restroom when the auctioneer begins, you’ve already lost.
7) The bank will set the opening bid and it will be announced those in the room. After that, the auctioneer will invite bids. The highest wins.
8) At the conclusion of each auction, the winner will sign a contract document and endorse the certified check to the trustee. In some cases, there will be an additional deposit needed soon thereafter. Most settlements must occur within 30 days or the deposit will be forfeited.
Please remember that this process may not be for the novices among us. It is not like traditional real estate sales; this is an “as is” deal in the strictest sense. No inspections, no contingencies and no closing cost assistance. In fact, you pay both your own closing costs and those of the bank. Then, as the happy winner, you might find a tenant or the previous owner still living in the property who is not welcoming you with open arms.
So what about our heroes? Well, when all was bid and done, Robert and Onelio had left their home as tenants in the morning and returned in the afternoon as future homeowners. Maybe it was winning the auction, maybe it was the thought of instant equity, or maybe it was the celebratory bottle of champagne we shared at the Cheesecake Factory at 11 am, but the three of us were on a high all day!
I recently had the pleasure of helping my new clients, Robert & Onelio, purchase their first home at an incredible discount. No, this was not a “fixer-upper” or some shell in a “down and going” neighborhood, but a lovely, recently renovated condominium in Columbia Heights. So lovely, in fact, that they had rented it two years earlier and were the existing tenants when we met.
Robert & Onelio had learned from their landlord that he was going into foreclosure. He even went so far as to give them the name and number of the foreclosure trustee. Nonetheless, when they decided to try to buy the condo early in the process and shoo the wolf from their landlord’s door, he failed to respond to all attempts at contact. Since he still owned the property, there appeared no way to buy it except to bid at the upcoming foreclosure auction. It was at this juncture that their neighbor, also a client of mine, suggested that they call me for help.
Well, even old dogs can learn new tricks, I thought, as the questions poured out. “Do we have tenant’s rights?” “Will we be evicted from our home?” “How does the auction process work?” And the kicker: “Can we really afford to buy it?”
After putting them in touch with Karen Lucey-Guess at Mason-Dixon Funding (klucey@masondixon.com), who helped them through the pre-approval process, I started to make some inquiries about foreclosure auctions. I don’t purport to be an expert by any means, but here are some basic tips from my research.
1) You can find out which properties are to be auctioned at the websites belonging to the auction houses. There are several in the area.
2) The trustee (person selling it on behalf of the bank) must publish the auction in the paper in advance, so check legal notices in the Post or the Times to find out more about the property you want.
3) If you are interested in a DC property, for a mere $4 each, you can download from http://www.dc.gov/ any document available in land records, including the Notice of Foreclosure which will tell you when and where the auction will be, as well as how much is owed on the loan.
4) Go to a foreclosure auction in advance, just to see how things work. Then it won’t be as stressful when you go on “your” day.
5) You must have a certified check to play this game. Each foreclosure notice will tell you how much to bring. Make the check out to yourself.
6) Be on time. Auctions can be scheduled for as few as five minutes each. If you’re in the parking lot or the restroom when the auctioneer begins, you’ve already lost.
7) The bank will set the opening bid and it will be announced those in the room. After that, the auctioneer will invite bids. The highest wins.
8) At the conclusion of each auction, the winner will sign a contract document and endorse the certified check to the trustee. In some cases, there will be an additional deposit needed soon thereafter. Most settlements must occur within 30 days or the deposit will be forfeited.
Please remember that this process may not be for the novices among us. It is not like traditional real estate sales; this is an “as is” deal in the strictest sense. No inspections, no contingencies and no closing cost assistance. In fact, you pay both your own closing costs and those of the bank. Then, as the happy winner, you might find a tenant or the previous owner still living in the property who is not welcoming you with open arms.
So what about our heroes? Well, when all was bid and done, Robert and Onelio had left their home as tenants in the morning and returned in the afternoon as future homeowners. Maybe it was winning the auction, maybe it was the thought of instant equity, or maybe it was the celebratory bottle of champagne we shared at the Cheesecake Factory at 11 am, but the three of us were on a high all day!
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