House went back to bank at auction, now what?

[Tom Rockwell]

Newbie here. Short version: I attended a local foreclosure auction and one of the houses I was interested in went back to the bank. Is there a way for me to buy it now directly from the bank, or do I have to wait for it to appear on the MLS?

Long version: I'm looking to buy some rental property through a turn-key provider.  My current plan is to use my credit cards to buy the properties (cash advance at 0% for a year with a 4% one-time fee) then have the houses appraised and get a traditional mortgage to get cash out and pay off the credit cards.  The catch here is that the refinance won't be enough to fully cover the credit cards, so then I'll have a bit of debt to pay off, and I don't know if I'll be able to get it all paid off before the 0% offer runs out.  This isn't going to stop me, but it's an issue.

To address this issue I've contemplated buying local foreclosures to flip.  I did some research and found there are a surprising number of foreclosures in my area.  The Sheriff's web site lists all the properties that are going up for auction each week and I noticed that all but a few of them were going back to the bank for $100.  The higher priced houses in my area were purchased by investors, ($1.7M home sold for $600k, etc.) and there were some deals in the $20k-$50k range on $150-$200k houses that went to investors, but every week there are 20-30 houses up for auction and on average all but about 3 were going back to the bank for $100.  I couldn't figure out why, so I decided to go attend and auction and find out first-hand.  

I had no intention of bidding or buying, but I wanted to come prepared as if I was going to, so I went through the list and identified 6 or 7 houses that I thought might be good candidates.  I wanted houses that were in good shape and didn't require a ton of work.  I can do basic clean-up and repairs, but if it needed a new roof or foundation or something I'm not interested.  

At the auction there were maybe 10 other people and about 25 or 30 properties being auctioned off.  And I learned that the reason most of the houses go back to the bank is because the bank's representative is "authorized to bid up to X amount for the house," basically setting a reserve price.  

One of the houses I was interested in had a reserve of $125k. Since nobody bid, it went back to the bank for $100. If my research is correct, this house should have an ARV of about $230k, and other than the grass being overgrown it appears to be great shape. I wasn't able to get inside so the inside could be a disaster, but assuming it's not and assuming I am still interested in buying this house, what happens now?

I know the bank owns it, and the plaintiff is listed on the Sheriff's web site. Could I potentially just call the bank, tell them I'm interested, and make them an offer? Or would I need to wait for it to appear on the MLS? Or... what happens now?

[Jeff Copeland]

Keep in mind the bank has a mortgage on the house, so they aren't really "bidding" so much as they are usually just making sure the house sells for at least what they are owed on the house. (Here in Florida, the lender basically has a "credit" for the amount of the foreclosure judgment - so if the bank is owed $125k, and no one bids more than than, it usually goes back to the bank). 

The general consensus is you have to wait until it hits the MLS, in anywhere from couple of weeks to several months, depending on their backlog and the complexity of the title work. The bank will want it fully exposed to the market to ensure they get max value, and it's nearly impossible to track down and get in touch with the correct asset manager at most banks.

You may, however, be able to track down the listing agent/brokerage who normally handles their listings and get a heads up before it hits the market and some insight into their pricing strategy.

Pricing strategies also vary widely once it hits the MLS. Some banks will price it low to attract multiple offers and a quick sale. Others may price it at full retail and let it sit for a while to see what happens.