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Buying on the Courthouse Steps

The second opportunity to buy a property in foreclosure is when the court or the trustee sells it to the highest bidder “on the courthouse steps.” (Don’t laugh; many times this is quite literal—the deal is done on the steps.)

Again, the time and date of the sale are advertised in a legal paper. And some Internet sites, such as those mentioned above, can help you with this.

Keep in mind that the lender is almost certainly going to be there and is going to bid the remaining amount of the mortgage plus any accrued interest and penalties. To buy the property, you’ll have to bid higher.

The biggest danger at this stage is that the property may have more than one mortgage on it, and the holders of the other mortgages may not be at the auction. You could buy the property paying off the existing loan only to later discover that what you thought was seller’s equity was actually covered by other mortgages. In other words, you could be buying a pig in a poke—paying too much. Be sure that you’ve thoroughly researched the property through a title search so that you’ll know what mortgages are on it.

Buying at auction is also tricky. You should not attempt it yourself, at least not the first time around. Get an agent who’s done it many times before to guide you. And also be sure your attorney checks out the purchase, the property, and the title.

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