Finding a BMW in a Foreclosure Property: What Really Happens When You Buy Sight Unseen
Back in 2010, I encountered one of the most challenging situations in my real estate investing career. After purchasing a property at a foreclosure sale, my team and I discovered a late-model BMW sitting in the garage. While finding a luxury vehicle might sound like a windfall, it actually marked the beginning of a legal nightmare that taught me valuable lessons about foreclosure purchases.
Table of Contents
Video: We Found a BMW at our Foreclosure Purchase
The Initial Purchase
We bought the property through the Weld County Public Trustee sale in Colorado. At first glance, everything seemed perfect:
- The house appeared vacant
- The property looked to be in great condition
- We were able to peek through windows showing no furniture
- Multiple bidders showed interest, suggesting potential value
- Our initial inspection revealed no obvious red flags
The BMW Discovery
Upon gaining access to the property after winning the bid, we opened the garage to find a nearly new white four-door BMW sedan. While some might think “free car,” my experience in real estate immediately told me this would complicate matters. In Colorado, if someone leaves personal property worth more than $300 (based on garage sale value), you must go through a formal personal property eviction process, including:
- Filing with the courts
- Getting approval
- Having the sheriff’s department involved
- Moving items to the yard or dumpster
- Waiting 24 hours before disposal
Legal Complications Emerge
After tracking down the previous owners through an online people finder service, I reached out about the car. Their response was shocking – they claimed we didn’t actually own the house. They believed the bank had foreclosed wrongfully and they would get the property back for free.
It turned out they had filed a lawsuit against the bank the morning of the foreclosure sale. This created a lis pendens (pending legal action) against the property, which severely limited what we could do with it. The timing of the filing made it virtually impossible for us to discover during our due diligence period.
The Resolution Process
To resolve the situation, we:
- Hired a lawyer to review the case
- Learned it could take over a year for the case to be heard
- Attempted to settle with the owners by offering $5,000-$10,000 to drop the lawsuit
- Became a party to the lawsuit ourselves to expedite the process
- Finally got the case dismissed after 4-5 months when the judge found no merit
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Important Lessons Learned
This experience highlighted several crucial points about foreclosure investments:
Title Issues
- Always get an Ownership and Encumbrance (O&E) report before bidding
- Understand that even O&E reports can’t catch same-day filings
- Remember that foreclosure sales don’t come with guaranteed clear title
Financial Considerations
- Build in substantial margins for unexpected issues
- Account for holding costs during potential legal battles
- Factor in legal fees for possible complications
- Consider the cost of personal property evictions
Marketing Mistakes to Avoid
Looking back at how we handled this property, I noticed several marketing errors:
- Using date-stamped photos in MLS listings
- Taking too few interior photos
- Not properly staging or preparing the property for sale
- Poor photo composition and quality
Current Foreclosure Market
Today’s foreclosure market is vastly different from 2010. In my area:
- Foreclosures are rare
- Competition is much higher
- The process remains complicated
- The risks often outweigh the potential returns
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Final Thoughts
While this experience was challenging, it taught valuable lessons about foreclosure purchases. The legal complexities, potential for hidden issues, and importance of proper due diligence cannot be overstated. For investors considering foreclosure purchases, remember that what seems like a simple transaction can quickly become complicated by legal issues, personal property claims, and title problems.