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Buying discounted properties at trustee auction sales is fast becoming one of the best investments in realestate. Be advised that this business is not for the inexperienced or the meek hearted. One of the reasons investors choose to use a company like Artisan Real Estate Group to buy for them at auction is that it takes some of the fear out of the process. There are other advantages as well and we will cover them in this article, but first let's define what a trustee sale is and how they work.


When a borrower on a property fails to make payments on a loan (note) the beneficiary (bank) will start a trustee sale to take the property back as collateral for the defaulted note. Usually, this process starts within 90 days after 1st delinquency. However, today, because of the large backload of defaults taking place many notice of trustee sales are being delayed.

Some sales may be delayed as much as a year.   When a bank finally decides to start the trustee sale process it takes 90 days to complete.   However, postponements and cancellations after a trustee sale has been initiated do happen which can delay the actual sale.

The following is a brief synopsis of the trustee's sale process:

01. A Trustee's Sale Guaranty (TSG) Report is ordered from a title company by a trustee. This report will list parties that may have an interest in this property, including all current liens, encumbrances and judgments.

02. After receipt of the TSG, all parties that have an interest, either in the original Deed of Trust or since its recording, have recorded an interest in the Property(junior lien holders) will receive notice of the Trustee's sale. This notice is to give ample warning to any parties that have an interest junior to first Deed of Trust that they may lose that interest once the property is sold at Trustee's Sale.

03. The Substitution of Trustee and Notice of Trustee's Sale is recorded in the County Recorder's Office.

04. The property and courthouse are posted with a copy of the Notice of Trustee's Sale and the same Notice is published for four consecutive weeks in a newspaper of general circulation in the county in which the property is located.

05. There is continuing contact with the title company to ascertain whether or not the IRS has filed a claim or lien, or whether the Trustor has filed a bankruptcy. Should either of these happen, additional procedures become necessary.  If a bankruptcy is filed at any time prior to the completion of the trustee's sale, the sale must be postponed until the Bankruptcy Court's order is received lifting the stay against any actions by any creditors of the Trustor.

06. The Beneficiary will be contacted approximately one week prior to the sale and asked to prepare a credit bid. This credit bid can include all principal, interest, monies expended to keep the senior lien holder current, taxes and costs & penalties permitted by the Note or Deed of Trust. To the beneficiary's credit bid the trustee's and attorney's fees and costs will be added and this amount is usually the opening bid at the time of sale.  This is what is called a "Full Debt Bid". However, that is not always the case and it is precisely the bids that don't follow this rule that we look for when buying at trustee sale.  There are 2 common bids at auction that we look for when acquiring property for our investors. The first is what is called a "specified bid". A specified bid is a lower bid than what is owed. The second type of bid is called a "Drop Bid". A specified bid is called that because the bank specifies the price instead of using the full debt. It is always lower than full debt and if it is lower than current market value, it may be a property to target for acquisition, rehab and flip. The "drop bid" is a bid that drops to a lower amount right before the auction. Technically, the Trustee has an obligation to provide that credit bid to anyone who asks no later than 9:00 am the day before the sale.  Failure to provide the credit bid before 9 AM the prior day requires that the trustee's sale be postponed.  However, big banks do what they want and this does not always happen. When this occurs, a drop bid has taken place.  At Artisan Real Estate Group, we have a special computer program that is designed to catch these jewels so we can inform our investors as soon as the price drops.

07. THE SALE: All bidders that are present will be asked to sign in with their name, phone number and address.   Each bidder must provide the trustee with proof of a $10,000 certified cashiers deposit. At the time of the trustee's sale the successful bidder must endorse the $10,000 check over to the trustee as a non-refundable deposit towards the purchase. The successful bidder must tender the balance due of the winning bid with certified funds by 5:00 p.m. the day after the sale. A Trustee's deed will be issued by mail within 2 weeks to the 3rd party buyer naming them as owner of the property. If no bidders bid, the Beneficiary will take the property for the amount of the credit bid and the Trustee will then issue a Trustee's Deed naming the Beneficiary as owner of the property. Keep in mind that the bidder at the sale takes the property subject to any liens that had priority above the Deed of Trust that was foreclosed. It is important that you know what you are doing in this area as it can cost you your investment. At Artisan Real Estate Group, we use professional title examiners to verify clear title for our investors.

08. The Beneficiary has the right to request that the Trustee postpone or cancel the sale at any time prior to the trustee's sale. The Arizona Revised Statutes require that the Beneficiary notify the Trustee, in writing, should the property be reinstated, paid off, or other agreement reached regarding the cancellation of the sale.

As you can see from the details above the process is somewhat intensive. This is precisely why Artisan Real Estate Group was formed.   Our company helps minimize the risk while maximizing the rewards for the investor. Our proprietary computer program compiles all of the data you need in one list to make sound decisions based on accurate valuations. We do the rest from there! Our service is comprehensive and our company can do as much or little as the investor needs.

We can drive, bid, rehab and sell. We do it all. Full service at a fair price. If you are an investor looking to diversify into solid investments backed by a hard asset we would love to talk you. Contact us today at  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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