Author Topic: Buying Houses at Foreclosure Auctions  (Read 1338 times)

WranglerBowman

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Buying Houses at Foreclosure Auctions
« on: February 08, 2018, 12:44:25 PM »
I was wondering who has experience buying homes at foreclosure auctions?  Specifically if anyone has bought a home or land at Auction.com or a similar virtual auction website?  I've been watching a couple homes with some acreage on Auction.com and they seem to go for about half of the tax assessed value.  I've also seen some of these homes that were previously on Real Estate Listings and was wondering how many foreclosure auctions are actually closed on?  Seems banks like to play a lot of games when they know they're going to lose money on a home.  Any experience or stories you have would be greatly appreciated.

coopdog

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Re: Buying Houses at Foreclosure Auctions
« Reply #1 on: February 08, 2018, 03:01:47 PM »
Among the many things I've done in real estate includes being a "barker" for foreclosures. I.e. I was the one reading the legal jargon and doing the auction. It is not your typical "who'llgimme1,000gimme1,000..." ruckus. It's more like a droopy eyed "Are there any bids?"

My quick and dirty two cents.

Most homes don't sale. The vast majority are worked out prior to the auction. Usually the day of the sale. Of the ones that do go to auction, the amount owed exceeds the property value, so the bank's "bid" is more than what you can buy the property, fix it up, and make a profit.

In most cases, you will need the money right then and there. Some trustees will let you go to the bank to fetch a check, but not all. I was under the instruction from my trustee to get a cashier's check the minute the auction ended, so buyers had to bring a check literally in hand. Personal checks not accepted. If the amount of the check was more than bid, my employer would cut them a check for the difference.

There is no due diligence after sale. No financing contingencies, etc. You are buying as-is. Find out everything you can about the property before.

Some people scratch out a living doing it. I don't see anybody getting super rich. But its a kind of wheeler dealer be your own boss lifestyle some folks enjoy.


tralfamadorian

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Re: Buying Houses at Foreclosure Auctions
« Reply #2 on: February 08, 2018, 06:13:47 PM »
+1 everything @coopdog said.

However, functionally there's a big difference between auction.com and foreclosure auctions (courthouse auctions).

Auction.com and similar will play games- they will say there's another bidder when there's not, reject your bid when it's over the minimum, then relist hoping for a higher price. Auction.com advertises a preliminary title report but there are many stories of them missing things. Biggerpockets has many threads about this. Some of the auctions are foreclosure- many are not in my area. I have not seen a property on auction.com in my area below market price in several years.

I personally prefer courthouse auctions though they are not for the faint of heart. As mentioned by coopdog, 1) you need cashier's checks beforehand, 2) more properties than not are withdrawn, 3) the bank number is typically higher than a reasonable investor price, and 4) you need to do your own due diligence and title report ahead of time. If you cannot do your own title reports, then those fees add up. But, I've never seen the dishonesty at courthouse auctions that appear to be accepted and common on auction.com. And possibly the biggest plus, courthouse auctions reach a much smaller group of potential buyers than auction.com.

I'm not yet at the point where I can gather up the cash to buy the properties I would be interested in but I do enjoy going to the courthouse auctions to watch and learn.

coopdog

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Re: Buying Houses at Foreclosure Auctions
« Reply #3 on: February 08, 2018, 07:51:00 PM »
Ahh. Just realized the OP was inquiring about auction.com, etc.

Honestly, skip all that auction.com stuff and just get a subscription to an online title search company (In my area that's titlesearcher.com). That is where those sites are getting their info. This gives you the most direct access to the Register of Deeds. Search for new substitute trustees deeds. Call the owners of those properties and try to buy them direct from the owner. You'll have first contact before it ever hits auction.com or the public notice section of the paper. A lot of the time, this is what is happening behind the scenes and why the foreclosures never actually go to auction.




LaineyAZ

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Re: Buying Houses at Foreclosure Auctions
« Reply #4 on: February 08, 2018, 08:02:47 PM »
Count me as another one who had a negative experience with auction.com.  This was in 2011, when I was the winning online bidder for a small house in Phoenix for $23,000.  I gave a $5,000 certified check to the escrow agent as instructed. 
Maybe 2 weeks go by, and I get a phone call out of the blue from same agent telling me to pick up my $5,000 check because the property had been relisted and sold to someone else.  Huh?
He was vague about what happened, but come to find out that he "forgot" to send in my $5,000 required down payment in time, and auction.com simply erased my winning bid as if it never happened.  I got my $5,000 back but raised hell with state agencies on the deception.  Of course, auction.com contracts are all about protecting themselves and making sure they don't have to pay any penalties to you for any liability on their part. 
I did get their law department involved, but they only responded because they had to answer to the state agencies that I reported them to.
Bottom line, I never did get any legal or financial satisfaction from them except to put their deceit on the record with state agencies.  They are scum, stay away.

However, I did buy another foreclosure house from Bank of America right after that for $29,100.  BofA was straightforward and easy to deal with, no surprises. 

MaikoTsumi

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Re: Buying Houses at Foreclosure Auctions
« Reply #5 on: February 09, 2018, 09:49:46 AM »
Post foreclosure sales can be a better option, i.e. REO. Equator.com is a clearing house for a lot of these bank owned properties. It's not as good as it used to be, the market's cleared a lot of inventory in the past few years, but you might find a bargain there.  Bank's play a lot of games in these transactions and they can string you along sometimes.

Fishindude

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Re: Buying Houses at Foreclosure Auctions
« Reply #6 on: February 09, 2018, 11:46:32 AM »
I bought a foreclosure next door at the county sheriff sale.   Biggest issue was spending a little money upfront to do a title search and make sure there were not multiple lien holders on the place.
It was really pretty simple until I took possession and had to clean up the nasty mess they left the place in.

WranglerBowman

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Re: Buying Houses at Foreclosure Auctions
« Reply #7 on: February 12, 2018, 10:47:26 AM »
All, thank you for the replies.  I plan to go to my first Court House auction in the next couple weeks just to get a feel for how it works.  I do have experience looking up deeds, as I believe all deeds are publicly available if you know where to look, and I'm able to interpret what's going on for the most part in the deeds, but I'm not sure how much I trust myself not to miss something in the legal language... 

Auction.com says that they will bid on the listers part to a reserve price set by the lister, I would imagine that most foreclosures in my area (Maryland) owe more than the bank will ever get so Auction.com is probably is a waste of time for the most part.

I have been under contract on multiple foreclosures, later rejected, then they go to auction, then the bank bids a high number so they can get the property into their name, then they go back on the market at an insane price, then I guess they settle...don't know been working on 2 properties for over 2 years now and still haven't seen the bank actually sell them.  I'm getting super frustrated because I've spent a lot of time on a lot of properties doing my due diligence and things just keep not panning out.

On another note I am planning to go to the Tax Sale Auction in our county and try that out, but I've heard that's a long process that most of the time ends up being fruitless as well...  I figure if I just stay the course eventually something has to work out, right...

Mother Fussbudget

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Re: Buying Houses at Foreclosure Auctions
« Reply #8 on: February 26, 2018, 04:28:40 PM »
There was a lot of discussion of Auction.com.  Does anyone have experience with the similar site bid4assets.com?

LiveLean

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Re: Buying Houses at Foreclosure Auctions
« Reply #9 on: February 27, 2018, 02:31:54 PM »
I bought off Hubzu.com in 2014.

I put in a bid and was immediately told to give my best offer by 5 PM the following day. So I did. I then learned that my bid was $5,000 too low and I lost. Bummer.

A few days later, my Realtor calls and asks if I had checked my email. Apparently the winning bid didn't go through or turned it down. I had ignored the email, which looked like SPAM from the proverbial Nigerian prince. Hubzu, at least at that point, outsourced a lot of its closing stuff to India. So as I wired money there, providing all sorts of info I figured would soon result in the most hideous identity theft.

Remarkably, it all turned out to be legit. The place I bought has appreciated nicely and I do well with rental income.

**The caveat here is that I was buying in an area I knew very well, had been actively searching in for years, and knew I was getting a great deal. Otherwise I wouldn't have bothered with what seemed like a very shady transaction.

trollwithamustache

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Re: Buying Houses at Foreclosure Auctions
« Reply #10 on: February 28, 2018, 10:29:49 AM »
Re:courhouse auctions, do you have someone who can teach you the basics of title researching? An acquaintance lawyer spent some time showing me how to suss out what all can be owed on various broken titles and it was quite educational and at least in my state maybe not clearly disclosed in the "as is" sale.

Huge arbitrage opportunities if you do your homework right, but I got scared pretty fast.