posted by the Dawn Thomas Team of the Intero Los Altos office
Since everyone is looking for that “great deal” in real estate and there is a lot of misinformation, I thought that the attached videos would be interesting to see. About 20 Intero Real Estate agents from my Los Altos office visited the Santa Clara County pre-foreclosure property auction. Really–it was downright boring!
A high percentage of the properties were getting postponed until future dates or the starting price was pretty close (or over) what market value is on these houses. We spoke at great length with one of the auctioneers that day. He told us that these homes are not the “great deal” that everyone is looking for or are hearing about in the media. Most of the time these pre-foreclosure properties sell for $30K, $40K, or $50K below market value.
Now before you grab your jacket and decide to hop in your car and zip down to the daily auction at the courthouse, please understand that these properties come “AS-IS”, with NO title insurance, NO disclosures, NO inspections, and can be riddled with back taxes or other liabilities that you as the new owner will need to make good on as the new party on title. Plus, you have to show-up with cashier’s checks in the amount enough to cover the entire cost of the property.
You will notice that there are folks standing around with cell phones, clip boards, and brief cases (stuffed with cashier’s checks). These are professionals that are out there every day. Some of them have “handles” or code names like “Dragon Lady.” Notice the gentleman in the black jacket–he is likely getting instructions from his boss or a partner on which properties to place a bid.
When you hear in the videos that the property will be “sold back to the beneficiary,” what this means is that the bank will take the property back and will then have to proceed with the full foreclosure process. The foreclosure process costs banks oodles of money, and the courthouse steps is the last resort before having to go down that path. About 90-95% of the time, the properties that are sold back to the beneficiaries wind up listed by a Realtor and are on the MLS. Did I mention that many of them are in not-so-desirable areas?
All in all, it was an interesting experience and I’m glad to be able to share it with you. I look at educating those I know as a big part of my real estate business. Goodness knows that several news media outlets are completely failing at this piece!
Comments? E-mail me. Thank you!