Court Ordered Sales - The 7 Step Guide To Avoid Disaster, Get A Screaming Deal and Make Thousands of Dollars

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

Avoid Disaster, Get a Screaming Deal and
Make Thousands of Dollars
Gary Wong, MBA
Page 1

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 its Really Worth .................................. 10
Step 5 Dont 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
Page 2

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. Youre 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 its a good deal?
Page 3

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
Page 4

Step 1 Finding the Court Ordered Sale
So, how do you find these Court Ordered Sales? The MLS doesnt really specify which ones are
Court Ordered Sales. At least for the general public, that is. Thats 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 buyers agent to work with you.
Whats 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 dont 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 buyers 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 buyers 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?
Page 5

Step 2 Ask, ask, ask the Listing Agent
Find out what the situation is with the foreclosure. Have your buyers agent ask the following
questions:
1.
2.
3.
4.
5.
6.
7.
Do the owners still live there or have they moved out?

Are there any tenants living there? If so, whats the situation there?
Is the property sold as is, where is, or are certain appliances included?
Why is the home a court ordered sale?
Is it a bank foreclosure?
Has there been an accepted offer yet? If yes, then
Has a court date been set yet? If yes, when and where?
Not only should your buyers 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:
Page 6

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 couldnt 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.
Page 7

Step 3 Read the Fine Print
So, you found a great Court Ordered Sale and you asked the questions and now youre about to
make an offer. The listing agent will likely send a package of documents to your buyers 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 youre
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 youre buying a foreclosure and the seller hasnt 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.
Page 8

Ok, so Ive read the fine print, Im well aware of the risks, but Im willing to take the risk at the
right price, but how much is it actually worth? What is its market value?
Page 9

Step 4 Find out What its Really Worth
This is why its SO important to have a knowledgeable buyers agent working for you. He/she
can give you a comprehensive analysis of what the property is actually worth if it wasnt a court
ordered sale.
You can look at current market conditions for that particular neighborhood, whether its a
buyers, 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 its worth, but shouldnt court ordered sales be sold at a discount?
Page 10

Step 5 Dont Pay Market Value
Since its a court ordered sale, then you shouldnt be paying the same as if it were a normal
listing. Because theres an element of risk involved as youre 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 buyers agent.
This is one of the cases where it doesnt hurt to lowball. Lowballing often offends the seller,
but since the seller is typically the bank who has no emotional involvement with the property,
theyll 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, its not important to get the accepted offer at this point. Dont get yourself in a bidding
war with anybody at this point. Ill 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 thats full of subject clauses. Thats HIGHLY RECOMMENDED if
youre planning to live in the home.
Page 11

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?
Dont worry, the games not finished. You still have plenty of time
Page 12

Step 6 Do Your Homework
So, you got the accepted offer. Now, its time for you to do your due diligence. You wrote an
offer full of subject clauses, right? Theres many ways to do your due diligence, but here a few
PRIMARY TO DOS at this point:
1.
2.
3.
4.
5.
6.
DO Send the paperwork to your bank or lender

DO Get their financing approval IN WRITING
DO a Home Inspection
DO an Oil Tank Inspection if its an older home
DO get a copy of the title search
DO call the municipal city hall to find out anything else about the property (ex-grow
op, legal or illegal suites, etc)
7.
8.
DO review the results of the findings with your buyers agent

DO talk with your buyers agent about what will happen next
Page 13

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, theyre doing all the due diligence noted above. Wait, does that mean I should just
let someone else do the due diligence so I dont 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, its highly recommended you do your due diligence.
Page 14

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 buyers 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?
Youll find out.
Heres 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 buyers agent on the spot. Now you know why I said you ALWAYS
bring your buyers 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.
Page 15

Final Thoughts Beware and You Will Prosper
Wasnt the information above valuable? Dont 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. Dont forget to READ AND UNDERSTAND ALL OF the Schedule A form.
2. Dont 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. Dont forget to hire a BUYERS AGENT to walk you through the process and REMEMBER
to bring him/her to court with you.
Page 16

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
buyers agent your plans and he can open up your mind to the vast opportunities of real estate
investing.
Page 17

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 theyve ever met.
Page 18

Contact Information
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