Date and location

Auctions are held on the first Tuesday of every month, on the steps of the main county courthouse.

In some counties it's obvious which courthouse to go to. In others you may have to circle around. You should see a few people gathered by 9:30 AM.

Time

10:00 AM to 4:00 PM Eastern Time.

Holidays

The main holidays that can conflict are New Year's Day and the Fourth of July. If either one falls on a Tuesday, the auction is held the next day, on Wednesday.

How to pay

Cashier's checks

Make your cashier's checks out to yourself or your LLC.

• If you don't use them, you can deposit them back into your bank at the end of the day.
• If you do use them, endorse the back of each check over to the attorney handling the foreclosure sale.

Bring a mix of amounts. If you plan to bid around $100,000, bring checks such as $50,000, $25,000, $25,000, $10,000 and $5,000.

This matters because you will have to overpay the attorney, who will mail you a refund check within 30 days. For example, if you bid $120,000:

• With two $100,000 checks, you hand over both and wait up to 30 days for $80,000 to come back.
• With a $100,000 check and a $25,000 check, you wait for only $5,000 to come back.

Cash

Cash is rare, but you may be able to combine it with a cashier's check, such as $100,000 by cashier's check and $5,000 in cash.

If you plan to pay with physical cash, call the foreclosing attorney's office ahead of time to make sure. Cashier's checks made out as described above work 100% of the time.

Wire transfers

A wire transfer will not work at the steps. You cannot pay later.

There is one possible exception. After you hand the attorney your cashier's checks at the steps, if you need to make an adjustment to your title or LLC, you may be able to arrange to wire the attorney and then pick up the checks you gave them.

New to auctions? Understanding liens

Liens that will not go away

The foreclosure sale will not wipe these out, so check them before you bid.

• Water and sewer. You can sometimes find the balance online for the address, but you might have to call. This is not normally an issue, but occasionally you can get stuck with a $1,000 water bill.
• Taxes. Look these up on the county tax commissioner's online portal. Taxes are especially a problem for auctions late in the year. You can almost plan on late-year tax bills not having been paid, but look them up to be sure.

Liens that are generally wiped out

• HOA liens. This is mostly true if the HOA lien was filed after the date of the security deed being auctioned.
• Mechanic's liens. These will generally be wiped out at the foreclosure sale. Make sure they are dated after the security deed or mortgage was recorded.
• Second liens and home equity lines. These are wiped out only if they were recorded after the deed that is foreclosing.

Watch out for subrogation

A lien can be subrogated to another lien even though the filing order shows it in first position. This happens somewhat with HELOC-type loans that were already in place when the first was refinanced.

For example, a HELOC may be filed ahead of a first security deed. If that HELOC is foreclosing, you may think it is in first position, but in many cases it could be subrogated to the first.

Are second liens bad?

You can buy a second- or third-position lien at the steps, and it definitely happens. If you do, you will owe the money due on the first lien and on any other liens ahead of yours.

What makes them tricky

• The lender may not work with you. Even though you hold the second lien, the first lien holder or bank often will not talk to you about the first lien, give you the balance or even let you make a payment.
• You can't really know the balance. Unless you have inside information, you have no way of knowing what is owed on the first lien. It may have been modified, or been in default at default interest rates for a long time. A first lien that started at $100,000 ten years ago could show a payoff of $120,000 today.
• Fees get added. The first lien's foreclosing attorney will add as many fees as they can.
• The first lien can still foreclose. This could start after you buy the second lien. If it does, be prepared to buy that lien at the foreclosure steps or work with the attorney to pay it off before the next auction.

How to handle the first lien

It is in your interest to pay off the first lien, or at least find a way to keep making payments on it until you can sell the property. At that point, the closing attorney would pay off both the first lien and the second lien you own.

Once the first lien is paid off, you are free and clear with your second lien, but your total investment is the first lien plus the second lien.

What you get with a second lien

You still owe the unknown balance on the first lien, but you receive a Deed Under Power. You can get access to the property after you go through the entire eviction process. Your physical rights are almost the same as with a Deed Under Power from a first lien.

Buying a HELOC

If you buy a HELOC at the steps, you will owe the balance of the first lien too, but you will get a Deed Under Power. You can convert that to a Writ of Possession through the eviction court process. Getting someone evicted can take a very long time, depending on the county.

When you go to evict the previous owners, they will always be surprised. Many homeowners mistakenly think they can keep paying their first mortgage, stop paying the HELOC and nothing bad will happen. That is not true.