3 family, appraisal, public auction

I'm not terribly familiar with the auction process, but I'll try to field this a little bit. I grabbed this regarding an auction in Brooklyn

"YOU MUST PRE-REGISTER TO BID. YOU MUST ARRIVE AT 1:00 PM.
IN ORDER TO PURCHASE ANY REALTY, BUYERS MUST HAVE:
A $20,000 certified or bank check payable to themselves. (Checks can then be endorsed over to the Public Administrator.)
A blank check to be used to pay the balance of the required 15% deposit.

NO ONE WILL BE PERMITTED TO BID WITHOUT THIS $20,000.00 PAYMENT AND BLANK CHECK.

BIDDERS’ $20,000 CHECKS WILL BE HELD BY THE PUBLIC ADMINISTRATOR. UNSUCCESSFUL BIDDERS’ CHECKS WILL BE RETURNED AT THE END OF THE AUCTION "

Regarding the appraisal, you are correct in that the bank will want one. This leads me to two scenarios
A)After winning the auction and putting your deposit down you have X number of days to arrange for financing and to pay the balance.
B)The auctioneer would sign the appraisal over to the bank so that they could use it for lending.

This is just my opinion, but if you are not familiar with these types of transactions you might be best to avoid it, or hire someone that has a lot of experience in the field.

Thank you TheFed.

If I didn't mind losing my deposit or had enough cash to buy outright this would be a moot issue I guess. I would if the Public Administrator's appraisal would be sufficient for a bank?

This may seem obvious, But I just want to be sure I understand this -- if the language says "Terms of sale provide for an all cash transaction which shall close 30 days after contract signing." -- means only bidders with 100% cash can bid, or people with deposit money + mortgage can buy?

IMO, at this time, I don't think you know enough about the process to take this risk.

Suggest you consult a RE lawyer who is experienced in foreclosures & auctions. There's a lot of pitfalls.

If it were me, I'd have my lawyer working on this, get my own title report, hire an inspector & speak to the bank from whom I'd get the mtg, all ahead of the auction. This way, you know what you're getting into.

Educate yourself now, so if you don't make this auction, you'll be ready for the next one.

Beware. You need to do your due diligence. "Subject to tenancy" could mean there are rent controlled tenants in the building so your plan to have market rate rental income might not go as planned. Also, many of these auctions (virtually all scheduled auctions at 60 Centre) are canceled last minute. Although this might change if the economic situation becomes more dire. And, yeah, you probably need all cash. Remember, if it seems too good to be true...

Yeah, you're making me nervous. You need to do lots & lots of research on something like this 'cause there are certainly a multitude of ways you can go wrong & then only losing your deposit might look like a blessing. BUYER BEWARE & study & talk to lots of people & maybe google & find books about this sort of thing. The bank may have info & perhaps the federal government has info but please take your time & know what you're doing up front. Good luck.

"then only losing your deposit might look like a blessing. BUYER BEWARE"

Totally agree. Imagine feeling that losing the deposit is a blessing! caveat emptor

Thank you to everyone for responses. I appreciate the concern and the info --

To clarify a few points -- I have already contacted our mortgage person/bank again and spoke with her at length. Also in touch with our RE atty. I just wanted to cover all bases and get information wherever I can. You never know who might have some useful info...

The property is in an outer-borough and will be auctioned there. The building is NOT rent stabilized, it is a 3 unit building.

It appears that it is not possible to have an inspection or appraisal before the auction.

The language on the county website says:
"Seller will deliver marketable title which is insured and guaranteed by a title company licensed to do business in the State of New York. FAILURE TO EXECUTE the contract of sale on the date specified for that property, or CLOSE on or before the date set in the Contract of sale shall be considered a DEFAULT. Copies of a sample contract, and Title Company report for each respective property, will be available for INSPECTION ONLY at the Office of the Public Administrator..."

Thanks again!

What bothers me is purchasing a building WITHOUT AN INSPECTION - Jeez Louise, you don't know WHAT you're getting. Since you worry about your deposit, it seems that you don't have pots of money lying about & will be just happy to break even once you get the project done. No inspection would be a deal killer for me. This real estate game is expensive enough without going in blindfolded. Again, tho, best of luck & let us know what's happening.

drdrd - your point is very well taken. We were willing to take on some unknowns if we could get it at a great price.

The update on the building is --

We went to look at it yesterday at the Public Administrator's 'open house'. Sadly only 2 of the 3 units were available to see and the basement had been locked from the inside. The only unit currently occupied was the 1st floor unit and that's what we couldn't see. The tenants weren't home and I guess then the city doesn't have access. The top floor units were vacant (a plus) but showed significant water damage on ceilings. Kitchens needed a little updating (not bad) and bathrooms were vintage retro and besides needing repainting, were in great condition. Floors needed some refinishing. We did see the roof and it needs replacing. Bathrooms were in great condition simply needing some paint and some cleaning, kitchens needed new appliances probably and a little cosmetic work.

Lots of people came to see the property, during both times when the city had it open.

We decided not to go forward though it would be a song if it goes close to the upset price, even with all the work it needs.

So we keep looking...

Good. Sometimes a bargain ain't a bargain. But if you want to buy at auction, learn about the process so you'll be prepared next time.

Couldn't get into the basement? I bet it needs a new boiler & they didn't want you to see that. Basement was probably a mess. Who knows.

dwell - True. Sometimes a bargain a relative concept. For the right buyer it would be a great home, just need to be willing to put in very good repair work to make it really habitable.

Not being able to view the entire building, including the boiler and heating mechanicals is worrying. I would think that the first floor tenant's apt connects directly to the basement and if they lack a lock on that door they probably did not want people tromping through from the basement up into their apartment / belongings. The owner is deceased so I'm not sure their hiding anything.

At any rate we'll still keep an eye out on the auction process. It isn't our first choice (would rather just buy something than have to go thru that).

tandare: thing is, by the time you pay for all the improvements (roof, boiler, & whatever {you don't know the bombshells that await cuz you can't inspect}), it may cost the same or less to buy via a regular sale.

True.