Culver City, CA · Member since 2011 · 9 posts · 1 vote
Hey Everyone,
I discovered www.auctions.com today which lists bank owned and foreclosed properties. They show houses that they are auctioning off (single family and Multifamily). Now I assume that for these properties the Banks want Cash up front, but some of the listing say "financing available".
Here's my question:
In general how hard is it to a) purchase a banked owned property and b) how hard is it to get financing to purchase bank owned properties.
I mean if the value of the home is $500K and there is only $250K outstanding on the loan, how difficult is it to convince the Bank to let you purchase the property for $250K if you can find a lender who will finance you?
There are more than one kind of auction. There are sheriff's sales (aka trustee sales or the "sale on the courthouse steps"). These are part of the foreclosure process. The details vary a lot from state to state. Usually all cash. Here in CO, some counties require cash (well, cashier's checks) the moment you win, some give you a couple hours to run to the bank. If you're financing it, the lender better we sitting beside you with a check.
The bidding starts at one of two places. Either the amount the bank is owed or what the bank thinks its worth. Your example is possible, but in reality never happens. Much more common for $500K to be owed on a house worth $250K. The bank might choose to start the bidding at $500K, in which case nobody will bid and the bank takes the property. Or, they might start it at $250K and go after the borrower for a deficiency. In that case, some else might bid and win. At least here in CO, the bank doesn't bid. They set the opening price and that's it.
There are also commercial auctions. Banks and other companies and even individual sell a property by auction rather than the normal process. Sometimes financing is available for these properties.
Hi Kevin Fintland
A lot of the auction.com properties are actually auctioning notes, not the properties themselves. Double check to see if they are auctioning the debt or the property. The listings are confusing and it's tough to tell sometimes. Call the 800 number and ask. If they are auctioning the note and you want to ultimately get the property, you will have to budget for foreclosure costs.
You, not Auction.com, will have to check title. You'll need to confirm whether the 2nd, 3rd, etc. liens will remain with the property.
If they are selling a note, you won't be able to enter the property until after you foreclose so you won't know how the property will be left by the tenant.
Auction deals can be really profitable, but I prefer the ones you can go into beforehand and get clear title. mck