Steps To Consider When Buying A Home At A Trustee Sale

Knowing some initial steps to take prior to an Arizona Trustee Sale will lower your risks dramatically. You have an opportunity to buy a home with immediate equity which is a huge benefit that can outweigh the risks and possible ramifications.

You are buying liens not properties when you purchasing through a Trustee Sale. If research is not done properly you could be buying additional liens in addition to the first lien and would have the obligations of paying all liens in full.

Doing the proper research and having the knowledge of title will lower your risks and potential ramification. Property tax liens are more probable and less of a liability than an IRS lien. Once liens are verified then you can feel more comfortable with moving forward to the next step.

Remember you are buying the property in an “As-Is” condition. There will be no inspection periods, no termite inspections, no home or seller warranties and no title insurance.

Be prepared to have a cashier’s check in the sum of $10,000. This will be mandatory as an earnest deposit. These funds are given to the trustee at the time of winning the bid. If you have second thoughts or do not close the transaction the following day, you will forfeit your $10,000 and could face possible legal ramifications.

There is really only two ways to obtain the cash needed to purchase the property. You either have the cash in the bank or you will have to use a hard money lender. Hard money lenders charge high fees and interest rates but the loan is usually for a 30 day time frame and then you can refinance at that time. Keep in mind you will need an additional down payment when you refinance the home.

Most homes that you purchase at the Trustee sale will need at least paint, carpet and miscellaneous repairs. However, when purchasing at the Trustee sale you are buying a property for under today’s market value and have already calculated the potential work that needs to bring the home up to standard.

A buyer at a Trustee sale will never pay more than 70 percent of market value. A conventional mortgage will only loan 80 percent of the value in a refinance.