Court Ordered Sales – the 7 Step Guide to Avoid Disaster, Get a Screaming Deal and Make Thousands...

Court Ordered Sales – The 7 Step Guide to Avoid Disaster, Get a Screaming Deal and Make Thousands of Dollars

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Court Ordered Sales – The 7 Step Guide to

Avoid Disaster, Get a Screaming Deal and

Make Thousands of Dollars

Gary Wong, MBA


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Table of Contents

Introduction ............................................................................... 3

Step 1 – Finding the Court Ordered Sale ..................................... 5

Step 2 – Ask, ask, ask the Listing Agent ....................................... 6

Step 3 – Read the Fine Print ........................................................ 8

Step 4 – Find out What it’s Really Worth .................................. 10

Step 5 – Don’t Pay Market Value ................................................ 11

Step 6 – Do Your Homework ..................................................... 13

Step 7 – Court Proceedings ....................................................... 15

Final Thoughts –Beware and You Will Prosper ........................ 16

About The Author ..................................................................... 18

Contact Information ................................................................. 19


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Introduction

Court Ordered Sales are sometimes known as “The Hidden Gems in Real Estate OR the Hidden

Disaster”. You can either find a stellar deal for a great home or you could end up buying a

headache or worse. You’re probably asking the following questions:

OR

How do I find them?

Are Court Ordered Sales the same as Foreclosures?

Where do I find them?

What steps do I take to buy them?

How do I know if it’s a good deal?


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What do I have to watch out for?

What are the steps involved?

Can I really make MONEY by buying Court Ordered Sales?

How Would You Like to Know the Ins and Outs for Court Ordered Sales?

Then Read On…


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Step 1 – Finding the Court Ordered Sale

So, how do you find these Court Ordered Sales? The MLS doesn’t really specify which ones are

Court Ordered Sales. At least for the general public, that is. That’s right, Real Estate Agents

have access to a more advanced version of MLS with over 200 search criteria and so finding a

Court Ordered Sale typically involves finding a buyer’s agent to work with you.

What’s the difference between a Court Ordered Sale and a Foreclosure?

A Court Ordered Sale is a property offered for sale by court order. This could be for a variety of

reasons. If the owners defaulted on their mortgage and the lender is trying to take title of the

home, then the court could order it to be sold, and so these are called foreclosures.

Other Court Ordered Sales could result from divorce, estate actions and builders liens.

Therefore, there are other ways to find court ordered sales if you don’t want to use an agent

and that includes going to your local courts and looking up court proceedings, having

connections with banks that would give you a heads up on upcoming court ordered sales,

finding them through divorce lawyers, etc…

However, the simplest way is to hire a buyer’s agent to do the search for you. They can narrow

your search by city, neighborhood, type of Court Ordered Sale and more and can even have

them automatically sent to you on a regular basis.

After you find the Court Ordered Sale, go out with your buyer’s agent and go look at them just

as if it were a regular home. Check out the condition, the neighborhood, access to transit and

the other things you are looking for.

But, what then do I do next?


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Step 2 – Ask, ask, ask the Listing Agent

Find out what the situation is with the foreclosure. Have your buyer’s agent ask the following

questions:

1. Do the owners still live there or have they moved out?

2. Are there any tenants living there? If so, what’s the situation there?

3. Is the property “sold as is, where is”, or are certain appliances included?

4. Why is the home a court ordered sale?

5. Is it a bank foreclosure?

6. Has there been an accepted offer yet? If yes, then…

7. Has a court date been set yet? If yes, when and where?

Not only should your buyer’s agent ask a lot of questions, he/she should be doing some

research on the property as well.

TRUE STORY

My builder client sent me this court ordered sale in Richmond and was really interested in

making an offer for it. I looked it up, asked the listing agent a whole bunch of questions,

googled the address and found out the following:


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Horrible Location – It was located next to the sewage plant. Who would want to live there?

Agricultural Zoning – It was a small house on acreage (30,000 sq ft), with agricultural zoning so

you couldn’t tear down the home and build homes, not a good property for builders.

Mafia Home – The home belonged to an infamous Mafia Boss. When I googled the address,

several news articles showed up talking about police raiding the property and finding crates of

smuggled tobacco and such. Great for resale, right? WRONG!

Obviously, I highly recommended my client NOT to buy it because of the obvious reasons.


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Step 3 – Read the Fine Print

So, you found a great Court Ordered Sale and you asked the questions and now you’re about to

make an offer. The listing agent will likely send a package of documents to your buyer’s agent

and included will be a form called a “Schedule A”.

The form is in fine print but read every word on this form. This form basically states that you’re

buying the property “as is, where is” and that there are no guarantees or warranties to the

property and is subject to court approval. After you read it, remember if you decide to make an

offer later, it MUST include a signed copy of the Schedule A.

If you’re buying a foreclosure and the seller hasn’t moved out yet, the home may be gutted

when you take possession of the home.

What does that mean? This means, when you saw the home when the seller was there, it was

probably in great condition with all these nice appliances and high quality finishings, but after

you left, the sellers got mad at the bank for taking their home and decided to take everything

they could from the property. This includes APPLIANCES, HARDWOOD FLOORING, CARPETS,

LIGHT FIXTURES and even WALLPAPER.


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Ok, so I’ve read the fine print, I’m well aware of the risks, but I’m willing to take the risk at the

right price, but how much is it actually worth? What is its market value?


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Step 4 – Find out What it’s Really Worth

This is why it’s SO important to have a knowledgeable buyer’s agent working for you. He/she

can give you a comprehensive analysis of what the property is actually worth if it wasn’t a court

ordered sale.

You can look at current market conditions for that particular neighborhood, whether it’s a

buyer’s, balanced or sellers market, whether that property has any unique features that

differentiates it from other properties and look at what comparable properties have recently

sold for.

Ok, now I know what it’s worth, but shouldn’t court ordered sales be sold at a discount?


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Step 5 – Don’t Pay Market Value

Since it’s a court ordered sale, then you shouldn’t be paying the same as if it were a normal

listing. Because there’s an element of risk involved as you’re buying the property “as is, where

is”, it should be priced at a discount. The amount of the discount is what needs to be discussed

and negotiated with the help of your buyer’s agent.

This is one of the cases where it doesn’t hurt to lowball. Lowballing often offends the seller,

but since the seller is typically the bank who has no emotional involvement with the property,

they’ll understand. The bank knows that no buyer is going to want to pay market value for a

foreclosure, especially if they have to bear the risk.

Note, it’s not important to get the accepted offer at this point. Don’t get yourself in a bidding

war with anybody at this point. I’ll tell you why in a moment.

At this point, just relax, keep in touch with the listing agent, write a low offer and just wait.

Remember to write an offer that’s full of subject clauses. That’s HIGHLY RECOMMENDED if

you’re planning to live in the home.


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Ok, I got an accepted offer with subjects, now what?

OR

I lost the bid to another buyer. He got the accepted offer. Now what?

Don’t worry, the game’s not finished. You still have plenty of time…


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Step 6 – Do Your Homework

So, you got the accepted offer. Now, it’s time for you to do your due diligence. You wrote an

offer full of subject clauses, right? There’s many ways to do your due diligence, but here a few

PRIMARY TO DO’S at this point:

1. DO Send the paperwork to your bank or lender

2. DO Get their financing approval IN WRITING

3. DO a Home Inspection

4. DO an Oil Tank Inspection if it’s an older home

5. DO get a copy of the title search

6. DO call the municipal city hall to find out anything else about the property (ex-grow

op, legal or illegal suites, etc…)

7. DO review the results of the findings with your buyer’s agent

8. DO talk with your buyer’s agent about what will happen next


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Now what? I did my due diligence and I removed the subjects, is the deal firm? Is it mine now?

No, not yet! As I mentioned above, you had to sign a Schedule A and it specified that your offer

was subject to court approval, a court date will be set and so onto court you go!

So, what if you lost out on the bidding war and someone else got the accepted offer? Then,

that means, they’re doing all the due diligence noted above. Wait, does that mean I should just

let someone else do the due diligence so I don’t have to? Not necessarily, because the other

buyer might not do their complete due diligence.

They might skip out on the Oil Tank Inspection, etc… They might be a builder and skip out on

the home inspection. If they did the due diligence, then great, you can just wait for a court date

to be set. If not, it’s highly recommended you do your due diligence.


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Step 7 – Court Proceedings

So, what happens after a court date is set? You show up 30 min before the allocated time

ALWAYS WITH your buyer’s agent. Check the court room number and you see if you can find

the listing agent. Ask him if he expects other buyers to be here. If yes, be prepared. Why?

You’ll find out.

Here’s what happens:

1. Before the court time starts, other buyers will show up and submit their SUBJECT FREE

OFFERS in a sealed envelope to the listing agent.

2. Court session commences.

3. The listing agent will present the envelopes to the lawyer who then presents it to the

judge.

4. The judge opens them all and can do a number of things:

a. Pick the best offer (combination of best terms, deposit, price)

b. Reject them all and push it back to everyone there, request them to revise their

offer and come back in 20 min with their strongest offer

c. Pick the 2nd best offer if the 2nd best offer is not too far off from the best offer

and it belonged to the 1st buyer who negotiated the accepted offer, did all the

due diligence and got the court date set.

d. Reveal the offer amounts out loud

e. Open up the floor like a live auction

f. Basically, do anything he/she wants

What should you do then? If you were the one that got the accepted offer, be prepared to

revise your offer with your buyer’s agent on the spot. Now you know why I said you ALWAYS

bring your buyer’s agent with you.

If you lost to another buyer to get the accepted offer and just showed up on the court date,

make sure you put your best offer (below market value remember) forward, because you might

not get a second chance.


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Final Thoughts –Beware and You Will Prosper

Wasn’t the information above valuable? Don’t you feel more confident now that you know

what risks are involved when going into a court ordered sale?

A couple points to remember:

1. Don’t forget to READ AND UNDERSTAND ALL OF the Schedule A form.

2. Don’t forget to offer BELOW MARKET VALUE for the property. You are bearing the risk

and if you were the 1st buyer who got the accepted offer, you might lose the sale on the

day of court to other buyers and then there goes your due diligence and money spent

on inspections.

3. Don’t forget to hire a BUYER’S AGENT to walk you through the process and REMEMBER

to bring him/her to court with you.


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Buying a court ordered sale can be a disaster if you walk into blindly. Just as if you were going

into a used car dealership filled with repossessed cars, pick out a car and buy it without doing

your due diligence. What if you buy a lemon?

If you do your homework and filter out the poor court ordered sales, you can easily buy great

homes at below market value. Once you do, then there are plenty of opportunities to

generate a killing in profits!

If the home is in poor condition but the home is in a great neighborhood surrounded by great

homes and close to transit and schools, then you can renovate it and flip it after a few months.

If the home is in good living condition, you can flip the home right away for a quick profit.

If the home is in good living condition and in a great central location, you could rent the

property out and generate positive cash flow.

REMEMBER, all these can be possible IF you pay BELOW MARKET VALUE. Discuss with your

buyer’s agent your plans and he can open up your mind to the vast opportunities of real estate

investing.


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About The Author

Gary Wong is an Award Winning, Full Time, Full Service Real Estate Agent

servicing buyers and sellers in the Vancouver area. He is known for his no

obligation, no pressure approach where his sole goal is to love and serve his

clients.

His business is based on 3 key foundations: Ethics, Honesty and Integrity and

his business motto is “Here to Serve”.

Gary did his undergraduate studies at UBC and his MBA at SFU. He brought his years in the

workforce along with his business education into real estate, differentiating himself with his no

obligation, no pressure approach.

When Gary first entered the real estate industry, he saw how the public viewed Real Estate

Agents as shady, unethical and unprofessional which immediately compelled him to establish a

new standard in the industry. After interviewing 7 brokerages, he finally chose Macdonald

Realty, a real estate brokerage famous for its focus on ethics, integrity and producing highly

trained and qualified Real Estate Agents.

Through hard work, long hours, guidance from his mentors and his strategic approach, he was

able to establish himself as a trusted expert among his friends and he won the Sales

Achievement Award at his company in his 1st year.

Gary strongly believes in serving the needs of others and believes that no 2 clients are the same

and so his consultation adjusts and adapts to every single individual he meets.

Passionate about this industry and its reputation, Gary is committed to doing things RIGHT. He

is also an advocate for continuous learning and training so that he can bring his best to serve

YOU!

Many who have met and spoken with Gary about his business philosophy and saw how he

worked, quickly realized that he is unlike ANY Real Estate Agent they’ve ever met.


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Contact Information

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Court Ordered Sales – the 7 Step Guide to Avoid Disaster, Get a Screaming Deal and Make Thousands...

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