Arizona Trustee sales have several benefits that outweigh the risks. Mastering the first step in winning a successful bid at a Trustee Sale can place you in a positive equity position.
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.
Getting around the cash needed in 24 hours is usually done thru a pre-determined hard money lender. The interest rates are high but you don’t need the money for long. Usually less than 30 days as you will refinance out of the hard money into a conventional loan. And yes, you do need a down payment.
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.
Most investors or buyers will not pay over 70% of market value. Keep in mind if you refinance the note using a conventional mortgage they only lend 80% of value.
