What Is A Trustee Sale?

A Trustee Sale can serve two purposes: it can mean you'll lose your home, or, it can provide you with a new way to buy a house. Find out everything you need to know with these informative tips and hints.

Have you ever checked the classified section of your local newspaper? If you have, then you've probably seen several ads that are labeled "Sheriff's Sale", or something of the like. These are just one type of a sale that are also known as trustee sales.

A trustee sale always involves real estate. It doesn't matter if the property is a city block or eighty eight acres out in the country. Once it is seized, it's all treated pretty much the same as it falls under the same laws.

So, how does a trustee sale happen? In order to understand the entire process, we must start at the very beginning. You find a piece of land for sale that you would like to buy. The land can either be bare, or it can have a house already built on it. Or, maybe the land has a barn or other outbuilding on it; it doesn't matter. You find out how much the property is selling for, and then you pay a visit to your local bank, credit union, or other lending institution to get a loan for the money you need to buy the property. Once you sign the papers promising to repay the money you have borrowed, the loan is secured. Then your local bank, credit union, or other lender gives the money to the existing property owner. The lending institution gets the mortgage deed, and you take possession of the property. You also get a monthly mortgage payment. Usually, your real estate taxes are included in your monthly payment, but not always.

Now, if at any time during the life of the loan that you fall behind in your mortgage payments, then the lending institution has the right (as outlined in your mortgage loan agreement) to foreclose on your land. This means that, since you have broken your contract by failing to meet all of the monthly payments, then you must relinquish ownership of the property to the lender.

Your property can also be foreclosed by the county in which you live in if you fail to pay your property taxes too.

At this point, a trustee - usually the county sheriff- but it can also be a lawyer acting as the trustee on behalf of the lending institution, takes legal possession of the land. He or she then arranges to have a Trustee Sale on a certain date and time. The purpose of the sale is to sell the property in an effort to recoup the amount of your loan. As stated earlier, the sale is advertised in the classified section of the local newspaper.

Once the day of the Trustee Sale arrives, your land will be auctioned off to the highest bidder. Since this type of auction is on a "cash only" basis, not everyone is eligible to bid. In order to be eligible, before the start of the sale, a person must show the auctioneer that he or she has a sufficient amount of cash or cashier's checks to cover the amount of their bids.

Usually, the bidding starts out with an amount that is equal to two thirds of the amount you owed. The property will be sold exactly "as it is" with no warranties or guarantees. When the auction ends, and the winning bidder has paid for the land with cash, he or she then gets a deed from the trustee.

If your real estate gets auctioned off at a Trustee Sale, it can be a sad event. But, on the other hand, if you are looking to buy a house for your family at a reasonable price, then you might want to check out the sales in the classified ad section of your local news paper.

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