Buying property at auction

[ChuckinVA]

My wife and I are considering bidding on a small farm ( 50 acres) that belonged to a member of her family that just passed away in November. His will stated that the property was to be sold at public auction.

What prebid home work should we be doing ?

Has any one had experience ( good or bad ) purchasing property this way ?

We have limited resources and if the property sells for something close to the assesment we will not be able to compete. We want to be prepared, know what our limitations are, and at least give it a shot.

We anxiously await your comments.

 

[Anonymous Poster]

The very first thing you want to do is check with the County Clerk to learn if there are any leins against the property.
Second, talk to the auctioneer. Many auctioneers work with lenders and can tell you exactly how much you can afford to bid. Usually, the auctioneer will require bidders on the property to be pre qualifyed, mainly to eliminate people from bidding who can't complete the transaction.
If the auctioneer regularly sells property, he can tell you what he expects the property to sell for.
You should also check with your attorney to determine what type of transferr deed will be offered, and how that will meet your needs.
Finally, find out if the auctioneer will charge a Buyer's Premium. If he charges 10%, that $100,000 bid is actually $110,000.
Good Luck

 

[TerryinMD]

Chuck,

Franz has some good solid suggestions.

Since you know some of the details about the property, you are ahead of the game. If this property is in Northern Virginia, you will be competing against developers... so the price may escalate quickly.

Talk to the executor of the will, they will have the name of the auctioneer and you should be able to get the details regarding the auction prerequisites. Be prepared to have some money to put down to prequalify, I've seen auction notices where the non-refundable fee (if you win the bid and walk away from the bid) can be between $1000 to $25,000 or more. Depends on the auction house. Another thing to do, is to get prequalified on a loan. If the property goes for $250,000, you typically have to have that money to the auction house within a few weeks.

As far as transfer of title, deeding, etc., it probably is similar to the closing on the purchase of a house. State and local regulations would govern that.

Additionally, I imagine that the purchase of the property is "As is....". Which means that you bear the responsibility of any possible problems after closing. No contengencies!!!

Hope this helps.

Terry

 

[bgott]

Check for encumbrances. Does it have any easements, odd setbacks or restrictions? I bought a property that had a 26 foot setback and didn't know about it until after it closed. I'm not that upset, mind you, I'm pulling over $1200 a month out of a $27,000 property. It was just a cheap lesson in checking everything there is to check out about a property before buying. One thing I would like to find out about is how to check a property for EPA problems. I've asked a couple of real estate sales people I know how to go about doing this and they not only don't know, they don't want to know. Texas law requires you disclose every problem you know about. I guess what you don't know when you're selling can't hurt you.

 

[ChuckinVA]

Great ! This is exactly the kind of help I was looking for. I will contact the executor and find out who the auctioneer will be and check with the clerks office to see if there are any liens. I have requested a copy of the deed and plat from the executor. The deed should list any special requirements. Thanks to all who responded and if any others want to offer additional information, please do.

 

[Anonymous Poster]

EPA problems, try www.toxicstargeting.com
I'm not sure if it covers all states, but it certainly covers New York, where the official policy of DEC is "if we know about a spill we keep quiet so the property owner can sell".

Another thing worth checking these days is the Sex Pervert information on file with local law enforcement. I was at an auction last summer where a bidder shouted to the auctioneer asking if he was going to disclose the pervert around the corner. Definitely an interesting evening.

When checking at the County Clerk, ask if there are any IRS leins against the property or the estate. IRS is famous for covert leins on property.

 

[Anonymous Poster]

Chuck: this may not affect you since you have some knowledge of the property, but, here in Missouri there are different "classes" of titles ranging from limited deeds to general warranty deeds. If true in your state, check as to the type of deed that will be issued. also, I use topozone.com to pull up usgs maps showing elevation, details down to 1:25,000. also, others have mentioned the issue of liens. a title insurance co can run a title search probably safer & easier than you or I. you can, however, read a title description and walk the thing off to see if if the legal description matches up with what you think you are getting. STRONGLY advise paying a few bucks to get legal advice from someone experienced in real estate law. finally, as others have mentioned, know your maximum when you go in. never let yourself get carried away in the heat of bidding! finally, although this seems not to affect you I would like to offer a WARNING to anyone looking a purchasing property. We found a farm we both really liked toward the end of 2001. We began negotiation and from info from selling broker (& our buyers agent) could have made a deal. When we did a contract we found out that the people claiming to be the sellers (and whose names were on the registered deed) were NOT the actual sellers. One of the big "relocation assitance companies" CENDANT MOBILITY to be specific, actually had a general warranty deed from the sellers that they had not registered!!!! The deal was that 30 seconds before closing CENDANT MOBILITY CORP would put the property in THEIR name, and give us (the buyers) a limited deed. after weeks spent investigating the property, $800 in legal fees dealing with the relocation companies' scheme we ended up not doing a deal because we couldn't get a good title (a limited deed is just that and precludes tracing back clear title prior to the limited deed-ugh, no one with a brain would want that). please note, this was a CASH deal (for $195k) no financing contingencies. I WOULD URGE ALL TBN PEOPLE CONSIDERING PURCHASING PROPERTY TO ENQUIRE BEFORE HAND IF A RELOCATION COMPANY IS INVOLVED and IF IT IS DON'T WASTE YOUR TIME and WARN YOUR FRIENDS. Its unbelievable what damage people (& big companies) will do to grab a few bucks. John

 

[Anonymous Poster]

John,

<font color=blue>www.topozone.com</font color=blue>

Is a neat site...thanks for the pointer to it!

Sorry the deal on that farm fell through....

Bill in Pgh, PA

 

[TedLynn]

Anytime that a Relo company is involved, transactions become much more complex and offer may pitfalls. Ted DK45