Trustee Sales Inside and Out

A Trustee Sale is defined as an auction of 'real property' which is conducted by a trustee or Sheriff.

Being well-versed in the process of trustee sales will minimize the amount of hassle in the long run. Prior to the actual trustee's sale, find out as much as you can about the property. Go visit the property and assess any foreseeable problems. Once you have found a property that whets your investing appetite find out the date and the location of the trustee sale. In most states the notice of sale will be posted on the property and will be advertised in at least one public medium 20 days prior to the trustee sale, at least once per week. However, do keep abreast of the situation, as some trustee sale dates are postponed for a variety of reasons.

Get Prepped

Trustee sales are conducted by an appointed trustee- a neutral party to act on behalf of the lender based on a deed of trust. Make sure that prior to the foreclosure sale you are well prepared and knowledgeable about trustee sales protocol. One requirement is ensuring you have a cashier's check made out to the specified trustee. Otherwise, you can simply endorse the check payable to the trustee. If you are planning to bid on multiple properties, have separate checks available for each. Depending on the state, the notice of sale will include the terms stating either a minimum deposit or specify that the full amount is to be paid at the time of the sale. If only a deposit is required the balance is due at settlement, normally around ten days after the auction.

Trustee Sales Bidding

Trustee sales commence with an opening bid. Normally the lender who holds the first loan will start the bidding at the amount of the loan plus all fees and interest accumulated. If only one person besides the lender is interested in the property they may have the winning bid with just a 'penny over' the opening bid. If there are others interested in the property then the bids normally follow increments of a hundred dollars or so. Other players you may be up against include junior lien holders, investors, and earnest deal seekers.

Post-Trustee Sale

Congratulations! You are the highest bidder. The trustee will now issue you a receipt along with the trustee's deed. You will also receive back any additional funds above the bid that were included in the cashier's check. At this point the borrower has forfeited their right to redeem the property giving you free and clear ownership unless any legal issues arise within the finalization process. All paperwork and title transactions should be completed within two weeks of trustee sales.