How it works

Eligible Bidders, as defined in the California Civil Code §2924m(a)(3) have the right to bid on the subject real property after the scheduled foreclosure sale. Please note that the opportunity to bid is time sensitive and will be lost if not timely acted upon.

Up to Fifteen calendar days after the foreclosure sale, eligible bidders may submit a nonbinding written notice of intent to place a bid. The bid or written notice of intent to place a bid shall be sent to the foreclosure trustee by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date (such as email, if accepted by the trustee) and shall be received by the trustee no later than 15 days after the foreclosure sale.

Forty-five days after the foreclosure sale, except that during the 45-day period, an eligible bidder may submit to the trustee a bid in an amount that exceeds the last and highest bid at the trustee’s sale, in the form of cash, a cashier’s check drawn on a state or national bank, a cashier’s check drawn by a state or federal credit union, or a cashier’s check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state.

 The bid shall be accompanied by an affidavit identifying the category to which the eligible bidder belongs and stating that the eligible bidder meets the criteria for that category. The trustee may reasonably rely on this affidavit. The bid and affidavit shall be sent to the trustee by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date and shall be received by the trustee no later than 45 days after the trustee’s sale.

As of 5 p.m. on the 45th day after the trustee’s sale, if one or more eligible bidders has submitted a bid, the eligible bidder that submitted the highest bid shall be deemed the last and highest bidder pursuant to the power of sale. The trustee shall return any losing bid to the eligible bidder that submitted it.

Qualifications

California Civil Code Section 2924m.

(1) “Prospective owner-occupant” means a natural person who presents to the trustee an affidavit or declaration, pursuant to Section 2015.5 of the Code of Civil Procedure, that:

(A) They will occupy the property as their primary residence within 60 days of the trustee’s deed being recorded.

(B) They will maintain their occupancy for at least one year.

(C) They are not any of the following:

(i) The mortgagor or trustor.

(ii)  The child, spouse, or parent of the mortgagor or trustor.

(iii) The grantor of a living trust that was named in the title to the property when the notice of default was recorded.

(iv) An employee, officer, or member of the mortgagor or trustor.

(v) A person with an ownership interest in the mortgagor, unless the mortgagor is a publicly traded company.

(D) They are not acting as the agent of any other person or entity in purchasing the real property.

 “Eligible bidder” means any of the following:

(A) A nonprofit association, nonprofit corporation, or cooperative corporation in which an eligible tenant buyer or a prospective owner-occupant is a voting member or director.

(B) An eligible nonprofit corporation based in California whose primary activity is the development and preservation of affordable rental housing.

(C) A limited partnership in which the managing general partner is an eligible nonprofit corporation based in California whose primary activity is the development and preservation of affordable housing.

(D) An eligible nonprofit corporation with all of the following attributes:

(i) It has a determination letter from the Internal Revenue Service affirming its tax-exempt status pursuant to Section 501(c)(3) of the Internal Revenue Code and is not a private foundation as that term is defined in Section 509 of the Internal Revenue Code.

(ii) It has its principal place of business in California.

(iii) The primary residences of all board members are located in California.

(iv) One of its primary activities is the development and preservation of affordable rental or homeownership housing in California.

(v) It is registered and in good standing with the Attorney General’s Registry of Charitable Trusts, pursuant to the Supervision of Trustees and Fundraisers for Charitable Purposes Act (Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code).

(E) A community land trust, as defined in clause (ii) of subparagraph (C) of paragraph (11) of subdivision (a) of Section 402.1 of the Revenue and Taxation Code.

(F) A limited-equity housing cooperative as defined in Section 817.

(G) The state, the Regents of the University of California, a county, city, district, public authority, or public agency, and any other political subdivision or public corporation in the state.

(b) Nothing in this section shall prevent an eligible tenant buyer who meets the conditions set forth in paragraph (1) of subdivision (a) from being deemed a prospective owner-occupant.

(c) A trustee’s sale of property under a power of sale contained in a deed of trust or mortgage on real property containing one to four residential units pursuant to Section 2924g shall not be deemed final until the earliest of the following:

(1) If a prospective owner-occupant is the last and highest bidder at the trustee’s sale, the date upon which the conditions set forth in Section 2924h of the Civil Code for the sale to become final are met. The trustee shall require the prospective owner-occupant to submit the affidavit described in paragraph (1) of subdivision (a). The trustee may reasonably rely upon this affidavit.

Learn

Buying distressed properties is not like typical homebuying, but it’s rewarding. After Auction Bid is committed to your success and here to provide providing helpful tools, education, and support to guide you through this process.

Underwriting, due diligence, or doing your research, is one of the most important steps you can take before acquiring a property. It is even more crucial when acquiring a foreclosure property. Here are the most vital steps to take before placing a bid.

 

Title and document review

Estimate the Homes Value and Repair

Determining Finanacing

Title and Document Review

The first step, for many, is to order a title report. This report shows the documents of record, as of the date requested. Alternatively, the documents may be available directly from the county recorder, in which they may be searched from the general index. It is important to verify the lien position of the subject foreclosed property to ensure clear title as to the acquired property or knowledge as to the open liens which may remain after the property is acquired.

In real estate, the general term ‘title’ references documents of public record relating to a given property. However, property is not the most correct term for this statement as ‘real property’ is the right or interest that a person has in the land, and anything affixed or attached to said land. Property is often defined as the rights and interests which a person has in the thing owned. It is important to verify that all the owners of record are those which signed the security documents at the time of origination.

A buyer takes the trustor’s (owner’s) interest which was sold at the foreclosure sale (i.e., the priority of the Deed of Trust foreclosed on at the time it went on the property, unless there is a subordination or other matter affecting the priority). The buyer takes title subject to all senior liens. Liens junior to the foreclosed Deed of Trust are usually eliminated (foreclosed out). The buyer will also have to pay any transfer tax and recording costs of the subsequent Trustee’s Deed which is not included in their bid.

Documents are recorded in the respective county recorder’s office where the property is located. Recording is the legal process of making an instrument an official part of the records of a county, after it has been acknowledged. Recording gives constructive notice as to the existence and content of these instruments to the public.

Estimate the Homes Value and Repair

Are you going to Buy and Flip ?

If you plan on flipping a home, you need to know what similar homes sell for in the area. You can review the property information report to view available property details or contact a real estate agent.​

You will also need to know how much it will cost to renovate the property, which may be tricky if the home is occupied. Most investors do a drive by and see if it needs a new roof, paint or other visible repairs. Contractors can give rough estimates and are essential team members.​

If you plan on making cosmetic repairs like replacing the carpet/floors, upgrading appliances and painting the interior, you can call a contractor to get a ballpark figure or do your own research.​

Are you going to Buy and Hold ?

If you plan to buy the property and hold it as a rental, you will need to know the market rents and rental vacancy rate.​

You will, however, need to know the renovation costs. You can reach out to a contractor to get a ballpark figure or do your own research.

If you’re going to rent out the property, consult with a real estate attorney to see if there are any local ordinances (like rent control or Air BnB restrictions) or laws that might make it difficult to be a landlord.

Determine Financing

Properties are sold on a “Cash Only” and “As-is” basis at the foreclosure auction. While bidding after the foreclosure sale, many lenders are not willing to provide loans on occupied properties or without an interior inspection. There are lenders who will collateralize the purchase, mostly hard money, whereas most buyers use said funds to acquire property and refinance out shortly after purchase with a traditional loan from institutional lenders.

Get In touch

(949) 310-9736

Email matt@afterauctionbid.com