For those of you who wait until the day of the foreclosure sale to go after a foreclosure investment opportunity, preparation is of utmost importance. The bidding on the courthouse steps is often fast-paced, and you will have little time to make a decision. This may mean a poor outcome if you have not already inspected the property and made a title evaluation.

You need to come prepared in the financing department, too. Cash or cashiers checks are all that will be accepted by the trustee, sheriff, or other representative of the foreclosing party.You have to strike a balance between bringing enough to win the bid and not bringing too much so that you go overboard and make a stupid purchase.

Gathering Information before You Bid

To assist an investor in getting the information about a property prior to bidding there are two reports: a lot book report and a judgment lien report. Check with your local title insurance company for their availability in your area.

They are the most economical way of getting information about liens against the property short of getting a preliminary title report, which will cost you more. A property profile will not give you that information, and you would be foolish to rely on a property profile alone.

Lot Book Report

The lot book report contains a record of everything that has been recorded against the property. Every property has a lien for property taxes. This is true even when the property taxes have been paid and the property tax account is current. Property taxes create a lien against the title to the property,which is called a lien that is due and not yet payable.

Any trust deeds or mortgages, which are the security devices for promissory notes or mortgage notes, respectively, and have been recorded against the property title can be found in the lot book report. Also, any other liens or encumbrances that affect the title such as easements will show up.

Judgment Lien Report

The judgment lien report contains a record of any money judgments that have been recorded against the owner of record for the property. These can include IRS liens, civil lawsuit judgments, state income tax liens, personal property taxes, and family court matters.

You can go down to the county courthouse to research the recorded liens yourself, if you know where to look and what to look for. Ask for help from the clerks. They will usually be glad to oblige. We recommend you do this at least one time so you get a sense of the huge amount of materials that are recorded.

Why this information is important becomes apparent if you ignore it. Remember, when you are the winning bidder at the foreclosure sale and get title to the property from the foreclosing entity, you get the title subject to all the senior liens and encumbrances.

When we talked about knowing value, we said that transferability was a critical element of value. You are the winning bidder and proud owner of the title to a property. You have nothing if you cannot transfer clear ownership title to another buyer.

Dry Run

To gain the greatest advantage at the foreclosure sale, we recommend you do a dry run by attending one or two sales on property you are not interested in prior to the sale of the property you are interested in. This

rehearsal will help give you the confidence you need to be successful at foreclosure sales.

Your observation of a foreclosure sale will be even more useful if you can witness a sale conducted by the same trustee, sheriff, or representative of the foreclosing party as the one that will conduct the foreclosure sale on the property or properties that you are interested in.

How Foreclosure Sales Are Conducted

There are minor differences in the manner in which foreclosure sales are conducted throughout the country. Your mission is to find out everything about the foreclosure sales in your neck of the woods. For purposes of illustration, we will use the Trustees Sales in California as our guide.

Trustees Sales in California

According to regulation, Trustees Sales in California are held between 9:00 a.m. and 5:00 p.m. weekdays and may be held at any public place. Although many are held on the courthouse steps, the proximity to the courthouse is of little importance.

In fact, some lenders who want to discourage other people from bidding (usually private lenders who want to take the property back) will often schedule the foreclosure sale at some remote location in the county where the property is located just to keep away the competition.

Julian, California We attended a foreclosure sale in Julian, California, for a property located in the city of San Diego. Julian is more than 50 miles from San Diego but is in the same county. Needless to say, not many people were at the foreclosure sale.

But that was the point. The holder of a second trust deed was foreclosing. He wanted to make the credit bid and get title to the property. If no one else came to the foreclosure sale, he would wind up winning the bid. There was a small first trust deed on the property, and it was a low loan-to-value ratio.

As a foreclosing second trust deed holder, he could step in and take over the first trust deed by just making the payments. There was almost