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.
The chain of title will determine all liens on a given property. This will show the mortgage liens in addition to any property tax and/or IRS liens. Do you research carefully as this is a crucial step in the process before bidding on a property. Don’t proceed to the next step until you feel comfortable with the valid liens and you’ve established your position.
We’ve all heard the term “As-Is”. You can rest assured when buying a home through a Trustee Sale, the property will be sold “As-Is”. That means there will be no inspections, home or termite, and no buyer or seller warranties. There will also be 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.
Once you purchase the home chances are they will require some maintenance. Most repairs will be cosmetic such as paint, carpet and drywall repair. You will need to bring the home up to standards before renting or selling the home. A percentage of the costs of repairs is usually decided or allotted prior to placing the bid and keep in mind you are buying a home with instant equity.
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.
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