why do we need lawyer for auction home bid at court

Even if a lawyer is not needed during the course of negotiations, both the buyer and seller may want to consult with a lawyer to answer important legal questions, such as the tax consequences of the real estate transaction. The tax consequences may be of critical importance to a home seller.

Full Answer

Can you bid on a house at a courthouse auction?

For example, if the lender has a $250,000 reserve on a property and the highest bidder bids only $200,000, the lender may decide to reject the bid. You can’t just enter a courthouse auction and place a bid. You must register beforehand, as well as qualify. That means getting your financing in order ahead of time.

Who are the bidders at a property auction?

Bidders at property auctions are often real estate investors who can afford to pay cash, but for auctions that allow financed purchases, it is best to get prequalified ahead of time. Some auction houses prefer that you work with their affiliated lenders and will have those lenders on site at the auction.

Why do you need a lawyer when buying a home?

Buying a home will probably be the largest and most significant purchase you will make in your life. It also involves the law of real property, which is unique and raises special legal issues and problems not present in other transactions. A real estate lawyer is trained to handle these problems and has the most experience to deal with them.

Why choose a reputable auction house?

Auction houses develop their own business reputation, and a reputable auction house will work hard to maintain their good standing in the business community and resolve any disputes or allegations of misconduct swiftly and professionally in accordance with law.

Can you back out of an auction bid?

In many cases — yes. Buyers who have placed a bid can retract their bid any time before the auctioneer announces the sale has been completed. It's important to note, however, that the withdrawal of one bid does not revive any previous bid. The auction will continue with the next highest bidder.

What happens if you don't pay for an auction you won?

The seller will repossess the house, auction it or otherwise sell it again, The seller will then go after the (original) buyer for any difference between the second auction and the first one, plus costs involved. The buyer will see a defaulted loan on their credit report, which will ruin their credit history.

What should you not do at an auction?

Artiquette: 11 Things Not to Do at an Art AuctionDon't raise your hands in the air if you're not bidding. ... Don't eat during the auction. ... Don't bid on the wrong lot. ... This is not the time to get some Zs. ... Don't bid just to drive up the price. ... Don't be afraid to follow up after the sale.More items...•

What will happen after the house is sold at auction?

Typically, the lender starts the bid for the amount owed on the property plus any foreclosure fees. At the auction, the property goes to the highest bidder. After the bidding ends, the new homeowner gets the trustee's deed as proof of ownership to the property.

How can I get out of an auction?

Am I ready to go ahead with the purchase? If you are the highest bidder, you have to sign the contract, and there is no cooling-off period. If you cannot complete the contract you will lose your deposit.

Can you pull out of an auction purchase?

Buyers can pull out after an auction, but it comes with heavy penalties. This is because they'll be in breach of contract. They'll lose the deposit they paid (which is normally 10% of the purchase price), and may be liable for additional costs too such as the seller's fees, and other penalties.

What are the legal rules of auction sale?

Rules of an Auction Sale1] Goods Sold in Lots. In an auction sale, there can be many goods up for sale of many kinds. ... 2] Completion of Sale. The sale is complete when the auctioneer says it is complete. ... 3] Seller may Reserve Right to Bid. ... 4] Sale Not Notified. ... 5] Reserve Price. ... 6] Pretend Bidding. ... 7] No Credit.

How do you prepare a house for auction?

Pre-Auction Tips: 9 Things To Do BEFORE Auction DayCheck Your Financial Capacity. ... Vet the Sale Contract. ... Make Sure You Have a Professional Building Report. ... Check More Than Just The House Condition. ... Register to Bid with Proper ID. ... Visit Auctions. ... Have a Bidding Limit and Stick To It!More items...•

Why do houses go to auction?

Houses go to auction because they're a quicker and easier way to sell houses. This makes it a great fit for sellers who want (or need) to sell more quickly than usual. It's especially true for "problem properties" too, which can really struggle to sell via estate agents.

Which action can be taken if you don't pay a lien against your property?

If you don't fulfill your financial obligations, Uncle Sam and other creditors can take out a tax lien, judgment lien, or mechanic's lien to get you to pay off your debts. If you still don't pay up, then they can enforce the lien, foreclose or seize the asset, and pay off the debt for you.

What type of foreclosure allows a property to be sold by court order after sufficient public notice?

What type of foreclosure allows a property to be sold by court order after sufficient public notice? non-judicial foreclosure.

How does property auction work?

How does a property auction work? To purchase the property the bidder has to put a 10% deposit down to secure the sale. The sale will then be completed within a month, when the remaining 90% of the funds are transferred. At an auction, interested buyers will bid for your property and the highest bid wins the auction.

What is the purpose of an attorney when signing a deed?

Once the deed and other closing documents are signed, an attorney can make sure that these documents are appropriately executed and explained to everyone.

What can an attorney do to help with title insurance?

Assuming you are in an area where title insurance is customary, an attorney can help review the title search and explain the title exceptions as to what is not insured. They will also determine whether the legal description is correct and whether there are problems with adjoining owners or prior owners.

What is a purchase agreement?

The purchase agreement is the single most important document in the transaction. Although standard printed forms are useful, a lawyer is helpful in explaining the forms and making changes and additions to reflect the home buyer's and the seller's desires. There are many issues that may need to be addressed in the purchase agreement, such as: 1 If the property has changed or if there has been an addition to the property, was it done lawfully? 2 If the buyer has plans to change the property, can that be done lawfully? 3 What happens if a buyer has a home inspector inspect the property and termites, asbestos, radon, or lead-based paint is found? 4 What if the property is found to contain hazardous waste? 5 What are the legal outcomes if the closing does not take place, and what happens to the down payment? 6 Will the down payment be held in escrow by a lawyer according to the escrow instructions? How is the payment to be made? Is the closing conditioned upon the buyer obtaining financing?

How to avoid problems with a home purchase?

Avoid Vague or Unclear Terms. A lawyer can help you avoid some common problems with a home purchase or sale. For example, a seller may sign a brokerage agreement that does not deal with a number of legal issues. This happens quite often as realtors often use standard forms, expecting that they will cover all situations.

What to do if a lawyer is not needed during the negotiation process?

Even if a lawyer is not needed during the course of negotiations, both the buyer and seller may want to consult with a lawyer to answer important legal questions, such as the tax consequences of the real estate transaction. The tax consequences may be of critical importance to a home seller.

What happens if you are the only person in the US without a lawyer?

If you are the only person there without a lawyer, your rights may be at risk.

What is real estate lawyer?

A real estate lawyer is trained to handle these problems and has the most experience to deal with them.

Who pays the bid price in an auction?

Where real property is the subject of an auction, then payment of bid must be made to the seller, unless the terms of the auction sale provide otherwise.

How do bidders participate in an auction?

Usually, bidders physically participate in an auction. Bidders can also participate in an auction by phone or internet. The auctioneer is usually paid by the seller based on commission. At least two bidders are needed to conduct an auction though bids need not be received from both.

Why do sellers do auctions?

In hot real estate markets, the seller of property often arranges an auction so that the various potential buyers can vie for the real property in question. In short, auctions are a business tool much in use but quite often little understood by the participants.

What is an English auction?

The English auction is the most common form of auction in use today and is commonly used for selling antiques, artworks as well as real estate. The Auctioneer. A seller can employ another on his behalf to conduct the sale.

Why are jewelry auctions considered valid?

Such laws are considered valid because when certain jewels are valued in artificial lights there is a great risk of fraud. Quality and value of jewels are determined accurately under daylight than under artificial light].

Why are there rules for jewelry auctions?

Reasonable regulations are made by states to regulate jewelry auctions because the sale of jewelry at auctions provides opportunity for fraudulent imposition of jewels over the public. Such laws provide for public’s financial safety. Some laws have restricted jewelry auctions to certain daytime hours.

What is an auctioneer?

An auctioneer is a special agent, who can act only under the authority of his/her principal. An auctioneer cannot bind his principal beyond his actually granted authority. Moreover, an agreement or a contract, which is beyond an auctioneer’s authority will not be binding on the principal.

What is an online auction?

An online auction is an event that takes place on the Internet where an individual lists an item to sell that other users are allowed to bid on to buy. Like real world auctions (e.g., when you buy a house), there is usually a certain window of time that the users have to bid on the item. When that window closes, ...

Which states require a license for online auctions?

States like California and Missouri require a license for online auctions, whereas New York and Minnesota have no regulations in place. Laws change frequently, however, so it is important to continue checking the relevant jurisdiction.

What does it mean when a seller is locked in to an eBay auction?

The seller is not locked in, however, until the bidding process ends. This means that they are generally free to revoke the offer beforehand.

What is the scary thing about online auctions?

The frightening thing about online auctions is that people are not face to face with one another. For example, there is no broker between the parties like when placing bids for a house, to determine whether a house is really for sale or what it looks like, and no bank involved to ensure the seller gets paid real money.

What does "reject" mean in auction?

This means that they are generally free to revoke the offer beforehand. The bidder in this situation has the ability to accept or reject the offer. Reject here does not mean they can pull their bid after being awarded the item. For these purposes, reject just means they did not bid high enough to beat out other buyers.

What is a contract in eBay?

A contract is a legal agreement between two or more parties that binds their promise to perform services, or as is the case here, to sell goods. The elements required to form a contract are offer, acceptance, and consideration (i.e., something of value; usually money). Applying that definition to an eBay auction, ...

Does contract law govern online auctions?

Although contract law governs the majority of online auctions, the above discussion demonstrates how other areas of law can easily come into play. Again, unless there is an obvious statute that applies or blatant violation of the law, it may all depend on the facts involved in the matter.

What is a courthouse auction?

Courthouse auctions may fall into two categories: absolute and lender confirmation. In an absolute auction, the winning bidder gets the property. In a lender confirmation auction, the lender has the right to approve the bid. Lender confirmation auctions have a reserve amount, which is a minimum bid needed to complete the transaction. For example, if the lender has a $250,000 reserve on a property and the highest bidder bids only $200,000, the lender may decide to reject the bid.

How does foreclosure auction work?

How Do Courthouse Foreclosure Auctions Work? When owners don’t pay their property taxes or their mortgage, their home may go up for sale via a courthouse foreclosure auction. Laws pertaining to auctions held by government entities vary by state.

What is judicial foreclosure?

Foreclosures involving the courthouse are known as judicial foreclosures . In some states, lenders must go through the courts to foreclose on a property when the mortgage has not been paid. Properties sold because of property tax delinquency almost always go through some form of judicial foreclosure, as the municipality has placed a tax lien on ...

What is a reserve amount in a confirmation auction?

Lender confirmation auctions have a reserve amount, which is a minimum bid needed to complete the transaction. For example, if the lender has a $250,000 reserve on a property and the highest bidder bids only $200,000, the lender may decide to reject the bid.

Can you redeem a property after foreclosure?

However, it is possible that relatives or other parties may provide the money for an owner to redeem the property. In some states, the owner has the right to redeem the property even after the foreclosure sale has taken place.

Do you have to pay the winning bid in cash?

In most states, you must either pay the winning bid in cash or via cashier’s check soon after the auction ends. For best results, attend several auctions to develop a feel for how they work before actually bidding on a property yourself.

Does foreclosure happen before a sale?

That includes the mortgage and foreclosure fees. This doesn’t happen very often before a sale, because if the owner had access to such funds they likely wouldn’t have faced foreclosure in the first place. However, it is possible that relatives or other parties may provide the money for an owner to redeem the property.

What happens when a bid is made during the process of completing the sale but before a prior bid is accepted

If a bid is made during the process of completing the sale but before a prior bid is accepted, the auctioneer has discretion to reopen the bidding or to declare the goods sold under the prior bid.”. That is, when the hammer falls, you, the winning bidder, have ownership title to the item. The auction is actually a series of separate sales, ...

What is a reputable auction house?

Auction houses develop their own business reputation, and a reputable auction house will work hard to maintain their good standing in the business community and resolve any disputes or allegations of misconduct swiftly and professionally in accordance with law.

What does it mean when a bid is with reserve?

Bidding processes are referred to as being with or without reserve, which reflects a provision in the UCC regarding whether or not the seller can withdraw the item, or set a “reserve” price, meaning if bids don’t go over that price the item is automatically withdrawn. If there is no mention of whether or not the auction is with reserve, then by law the seller retains the right to withdraw the items.

What is an auctioneer license?

According to Black’s Law Dictionary, an auctioneer is “a person authorized or licensed by law to sell lands or goods of other persons at public auction. One who sells goods at public auction for another on commission, or for a recompense.”. The reason that auctioneers are required to be licensed and regulated is ...

What is an auction in summer?

Are you attending any auctions this summer? An auction, according to Black’s Law Dictionary, is “a public sale of property to the highest bidder by one licensed and authorized for that purpose,” but for all of us who have purchased art, antiques, horses, cars, or who-knows-what-all at an auction, the event is clearly much more than that.

What is an auction?

An auction is a means of conducting a specifically defined legal sales transaction, regulated by the terms of the Uniform Commercial Code, as well as each state’s consumer protection, sales, and auctioneer licensing laws. Many municipal regulations that shape the timing, location, and terms of an auction event, ...

When is an item identified in an auction?

In addition to existing, an item must be “identified” before the legal ownership interest in it can pass to the purchaser and complete the sale. At a UCC-type legal auction, the sale is complete when the hammer falls, and an actual good passes legal ownership to the purchaser.

How long does an upset bid last in a county auction?

If you win the county sales auction, you are not necessarily guaranteed rights to the property because an “upset bid” period lasts for 10 days following the sale. Any party with interest in the property can file an upset bid that is at least 5% or $750 greater than the previous bid. This process can occur at any point during this 10-day period until the price gets to a point where no one has a desire to raise the selling price further. Each time an upset bid is placed, the 1- day upset bid period starts over.

Where do county auctions take place?

Most county sales auctions occur on the steps of the county courthouse or at another location designated by the Clerk of the Court . During the auction, the auctioneer starts the sale at a pre-determined price that covers any back taxes and foreclosure costs. If you are in attendance at the auction, you can raise this initial bid and anyone else in attendance can do the same, just like at a traditional auction.Once the last bid is raised, the auctioneer announces the winner. If you win the auction, you must submit a 5% deposit on your bid or $750.00, whichever is greater. This deposit must be in the form of certified funds or cash.

How long does it take to get a confirmation of sale?

Once you submit your bid money, a Motion for Confirmation of Sale will be filed with the court. This process typically takes 10 days to complete, and once the Court confirms the sale, you own the rights to the property.

What does it mean to buy a foreclosure as is?

But buying a foreclosure “as is” means you may end up with a bad roof and a useless basement.

Do you need to do homework when buying a house?

Any time you’re buying a home, you need to do your homework. But those rules are twice as important if you’re considering how to buy a house at auction, especially if you’re attending a live auction, where excitement and emotion can cloud your judgment.

Do auction homes qualify for a mortgage?

Auction homes provide a number of benefits, but the process seems designed for a certain adventurous kind of person, since many of the homes don’t qualify for a mortgage. Here’s what to know going in.

How long does it take for an auction house to close?

For a retail auction (like Auction.com), the auction house will start preparing your title right away. “Closings are typically 30 to 60 days later,” Monzo says.

What is a HUD auction?

HUD auctions. A HUD auction is a foreclosure auction on homes that were financed by the Department of Housing and Urban Development (HUD), a federal agency instead of a private mortgage lender . “These auctions aren’t your eBay-type auctions,” says Monzo, “they are closed auctions.”.

How long does it take to close a HUD auction?

During a HUD auction, buyers paying in cash can close the deal in just a couple of weeks. If you’re mortgaging your HUD auction home, it will take about 30 to 45 days for the home to close. At courthouse or sheriff’s sale auctions, the buyer cannot take possession of the home for six months, says Monzo.

Do you have to be present to bid at a courthouse auction?

Unlike retail and HUD auctions, if you want to bid at a courthouse auction, you must be physically present. If the auction is a large tax lien auction, each bidder will receive a paddle to raise when they want to bid, Monzo explains. If it’s a sheriff’s sale auction, all bidders gather in a room together and simply raise their hands ...

Can you bid on a home before the auction closes?

You can bid anytime before the bid closes in an online auction, but if you want to purchase an auction at the county courthouse, you’ll have to attend the auction in person and bid when the home you’re interested in comes up for sale.

Can you buy a house with a mortgage?

Most home auctions operate in cash, meaning you can’t buy a house with a mortgage, though one exception to that rule is a HUD auction. “Remember, though,” says Monzo, “These are typically distressed homes that don’t have utilities turned on, so even if the auction allows mortgages, a lot of the time the mortgages can’t close because of the condition of the home.”

Can you see a home before bidding?

If you’re bidding with an auction company, Monzo says you’ll be able to see the home beforehand about half of the time, unless the home is owner-occupied and still in the redemption period. If you’re bidding on a HUD home, you can walk through the home before the auction with a real estate agent, he says.

What happens when a home is auctioned?

Another way a home ends up on the auction block is when the owner does not pay the assessed property taxes. In these cases it is the unpaid tax authority, rather than the bank, that seizes the property. The resulting tax lien auction is conducted by a local sheriff, clerk, or the county or local tax authority’s comptroller’s office.

How does winning a property at an auction work?

Winning a property at auction can work in two different ways. In a lender confirmation auction, the lender does not have to accept your offer, even if you are the highest bidder. In an absolute auction, the winning bid gets the property.

What happens if you don't pay your mortgage?

When this happens, the bank files a notice of default with the county recorder. If the homeowner does not pay the balance owed—or renegotiate the mortgage with the lender—the lender can put the home up for auction and force the homeowner out for nonpayment. These foreclosure auctions are held by bank-hired trustees .

What are the benefits of buying at auction?

The benefits of buying at auction include expanding your options and possibly purchasing at a discount. You may face less competition to buy an auction house compared with buying in the traditional way, but you will also be dealing with a different pool of potential buyers—often, experienced investors.

Where do real estate auctions take place?

Regardless of the auction type, these events may take place at physical locations such as local government courthouses and hotel conference rooms, and these in-person auctions are completed rapidly. Real estate auctions also increasingly take place online, where they may last for days or weeks.

Where can I find auctions?

It is vital to be well educated about how real estate auctions work. You can find home auctions through local governments, real estate agents, and online sites such as RealtyTrac.com and Auction.com. Auction properties often do not allow a home inspection or any legal way to view the interior in person.

Do you need cash to buy a house at auction?

Buying a property at auction usually requires a lot of cash. Each auction company and county government has its own requirements for payment, but you will probably need cash just to secure your right to bid. Down payment amounts and methods of purchasing often depend on the property and the auction house.