Author Topic: Just won an auction for a single family home!  (Read 6045 times)

Bearded Man

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Just won an auction for a single family home!
« on: August 14, 2015, 04:43:13 PM »
A 3 bed, 1.75 bath house in a great area, walkscore of 73, safe, near transit and all kinds of things I used to enjoy when I lived in the area before!

Ended up winning the auction for 140K for a total purchase price of 147K with 5% buyers premium. Still, the house is worth approx 180K. Will see when the appraisal comes in, but I've gotten pretty good at doing comps.

Super excited. This will be my fourth house, and I will turn my existing primary residence into another rental, so I will have three rentals. I do still intend to get one more house to max out my loans (one house I own was paid in cash) and have four rentals eventually.

So far this auction thing has been better than traditional MLS hunt and pick strategy which seems to take forever. To be fair, I did find the house on Zillow, but it ended up being the fact that it was an auction listing that was the deal; purchased well below market value.

Thinkum

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Re: Just won an auction for a single family home!
« Reply #1 on: August 14, 2015, 04:49:17 PM »
Congrats! What area and do you self manage or have a PM company?

Bearded Man

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Re: Just won an auction for a single family home!
« Reply #2 on: August 14, 2015, 04:57:54 PM »
Congrats! What area and do you self manage or have a PM company?

Tacoma, WA, about 40 minutes south of Seattle. Near the Narrows Bridge. If you are from the area (a lot of guys here are), you know it's a nice area.

I self manage. I am also apparently getting into doing renovation work mostly myself since I can't find a contractor.

Thinkum

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Re: Just won an auction for a single family home!
« Reply #3 on: August 14, 2015, 05:04:16 PM »
Not that familiar with the area besides knowing Tacoma was south of Seattle. :)

In a way, doing your own work can be better. No one cares as much as you do for your property.

MakingSenseofCents

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Re: Just won an auction for a single family home!
« Reply #4 on: August 14, 2015, 05:12:32 PM »
Congrats!

Brilliantine

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Re: Just won an auction for a single family home!
« Reply #5 on: August 14, 2015, 05:17:37 PM »
Congrats!

I'm in the eastside suburbs. I didn't know that Zillow posted foreclosure/auction properties.

Care to share some details? Is the purchase all cash? Is there a place where you talk more about the auction purchase strategy?

How much do you expect to spend on the repairs?

fishnfool

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Re: Just won an auction for a single family home!
« Reply #6 on: August 14, 2015, 09:49:42 PM »
Way to go!

Bearded Man

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Re: Just won an auction for a single family home!
« Reply #7 on: August 17, 2015, 09:52:10 AM »
Congrats!

I'm in the eastside suburbs. I didn't know that Zillow posted foreclosure/auction properties.

Care to share some details? Is the purchase all cash? Is there a place where you talk more about the auction purchase strategy?

How much do you expect to spend on the repairs?

The purchase will be financed with a conventional 30 year loan. These days the majority of the properties I see on Zillow in the price range I'm looking in are auction properties.

Not a ton of strategy on this, my agent put the bid in for me, looked like only one other bidder and I won. Funny thing is, when I had to pre-qualify through the sellers (bank) lender, the lady on the phone told me she just did a loan for a guy who bought a house on the east coast for 200K at auction, and it appraised for 500K. What a score. This was my first auction and one of the best deals so far assuming the inspection pans out.

So far I've purchaed 1 REO, 1 Short Sale (with two lien holders), 1 conventional and now 1 auction.

I've paid cash, paid minimum down with government loan, paid 20% down for conventional and 20% conventional again.

CashFlowDiaries

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Re: Just won an auction for a single family home!
« Reply #8 on: August 17, 2015, 10:27:55 AM »
That is amazing.  I never knew you could purchase from an auction with financing.  That is news to me.  Here in TX, you must pay all cash.  I guess it varies by state.

Sounds like you found a great new future rental.  Thanks for sharing. I love hearing things like this.   I will be on the hunt for my next rental probably in a month or two but im already getting antsy about it.

zinethstache

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Re: Just won an auction for a single family home!
« Reply #9 on: August 17, 2015, 03:19:23 PM »
Congrats! we are just north of Seattle. We lost an auction by 1k 2 years ago. It would have been a financed duplex. We had our lending approval letter on hand. Our agent had to submit the offer for us. Wish we would have won it but DH would not go any higher:)

We also do our own work and that has paid off in spades. We have licensed electrician and plumber in the family (DH is the electrician). We've paid for one roof, we knew when we bought it was going to need it and factored the cost in. That was a foreclosure.

Bearded Man

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Re: Just won an auction for a single family home!
« Reply #10 on: August 17, 2015, 03:29:37 PM »
That is amazing.  I never knew you could purchase from an auction with financing.  That is news to me.  Here in TX, you must pay all cash.  I guess it varies by state.

Sounds like you found a great new future rental.  Thanks for sharing. I love hearing things like this.   I will be on the hunt for my next rental probably in a month or two but im already getting antsy about it.

So, originally the seller (a bank) had posted it as a cash only deal for a much higher price, valued at 240K. Then when my agent reached out they updated the listing to reflect that it was an auction and that the starting bid was 80K, as well as the fact that financing would be available. Although I'm sitting on enough cash to pay cash for the final price of 147K, I'd much rather finance and put money into another rental, as well as VTSAX, not to mention sprucing up existing rentals.

sammybiker

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Re: Just won an auction for a single family home!
« Reply #11 on: August 17, 2015, 05:17:25 PM »
Congrats!  Post some photos and updates after the appraisal is completed, would love to hear more.

CashFlowDiaries

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Re: Just won an auction for a single family home!
« Reply #12 on: August 18, 2015, 02:34:13 PM »
That is amazing.  I never knew you could purchase from an auction with financing.  That is news to me.  Here in TX, you must pay all cash.  I guess it varies by state.

Sounds like you found a great new future rental.  Thanks for sharing. I love hearing things like this.   I will be on the hunt for my next rental probably in a month or two but im already getting antsy about it.

So, originally the seller (a bank) had posted it as a cash only deal for a much higher price, valued at 240K. Then when my agent reached out they updated the listing to reflect that it was an auction and that the starting bid was 80K, as well as the fact that financing would be available. Although I'm sitting on enough cash to pay cash for the final price of 147K, I'd much rather finance and put money into another rental, as well as VTSAX, not to mention sprucing up existing rentals.

Okay that makes more sense now. Man you got lucky!  Wish I could find something like that.

surething22

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Re: Just won an auction for a single family home!
« Reply #13 on: August 19, 2015, 12:36:08 AM »
Congrats!  Post some photos and updates after the appraisal is completed, would love to hear more.

Agreed -- definitely looking to hear/see more about how this goes for you. Big congrats.

Bearded Man

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Re: Just won an auction for a single family home!
« Reply #14 on: August 19, 2015, 08:27:57 AM »
Signed mortgage paperwork, dropped of Earnest Money check, scheduling inspection. Should get an appraisal in shortly, which I will post. Not too happy with the fact that the excise tax and other closing costs normally paid by the seller are passed onto me, but at this price...

Let's just hope the appraisal comes back high. I doubt it will come in at 240. My estimate based on comps is about 180-190K, but I just did a glancing review of comps. 

For the area, it's got to be worth more than 147K.

The loan officer mentioned doing a loan for a guy in Maine who had won an auction for 200K and the house appraised for 500K. Talk about lucky. Holy crap! Must be nice to be able to BUY that kind of equity. Best I've done is had a house go up nearly 100K in just over a year and a half.

OneDollarAtATime

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Re: Just won an auction for a single family home!
« Reply #15 on: August 20, 2015, 10:14:09 PM »
Well done!  Great area!  I know the area a bit and it sounds like you picked a winner!

Bearded Man

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Re: Just won an auction for a single family home!
« Reply #16 on: September 02, 2015, 10:34:19 PM »
Appraisal came in at 170, but only one of the comps matches. The subject is 3 bed 2 bath. Only one of the comps matches this and it came in at 210. The others are 2bed 1bath and came in at 180 and 160. These are sale records of course.

Say, it is only 170 though, I am still making 65% cash on cash return on closing, and it will be a very positive cashflow property.

« Last Edit: September 05, 2015, 12:29:02 AM by Bearded Man »

Brilliantine

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Re: Just won an auction for a single family home!
« Reply #17 on: September 03, 2015, 10:43:31 AM »
How do you calculate that ROI?
(Appraised Value - Purchase Price) / (Down payment + closing costs)?

Bearded Man

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Re: Just won an auction for a single family home!
« Reply #18 on: September 05, 2015, 12:30:58 AM »
How do you calculate that ROI?
(Appraised Value - Purchase Price) / (Down payment + closing costs)?

Yes, that's correct. I'm getting 2% concession to buy down the interest rate and there is still money left over for closing costs. Add to that 1K for a washer and dryer, $100 for a pro to paint one room, and 1K for new flooring in the carpeted areas, and $200 for a new garage door (man door).

Baldman

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Re: Just won an auction for a single family home!
« Reply #19 on: September 17, 2015, 11:36:17 PM »
Congrats, I have not heard of an auction not taking place at the Pierce County Court House.  I have several Tacoma rentals purchased at auction but traditionally done at the court house all requiring full cash (cashiers check) payment. The silent bid sounds like an interesting option.