Buying houses at auctions

[Robert Greene]

I am looking for information about buying houses at auctions. I have found a couple that look like they might be good buys if I can get them for the right price. Some of my questions include title searches ( how and where, what sites are recommended) is there a way to find out the minimum bid I am in southeast Michigan and found the houses on auction . Com but when I go to the Wayne county court website I can not find any other info or dates for the auction Just looking for any advise or knowledge on the subject. Thanks

[Account Closed]

Buying houses at auctions

I am an auctioneer and own an auction company. We do about 200 auction sales a year, no foreclosures or bank sales, all owner, investors, wholesalers, assignment ordered auctions of real estate only.

Here are some ideas when considering buying at auction:

• often times potential bidders will ask, "what's the opening bid?" not to worry about an opening bid, its not what you open with it is about the final bid that counts
• don't jump in and be the first bidder, wait to see what others are bidding, when the bidding slows down to almost a stop, that is when you may want to consider a bid (if it is the price you set for yourself)
• at the auction, try to stand parallel to the auctioneer, this way you can see who is bidding and who is not ----- meaning at times the auctioneer will create false bids in order to get the price up. This is not legal, unless it is disclosed
• be ready to do business, since you are paying cash, have that cash ready; get credit lines, borrow money and put it in account for your auction business, have partners (preferable family) with the cash ready to use
• get your name on the mailing list of all of the auction companies in your area so that you are notified of sales
• talk to the auction associate in charge to try to get some inside information about the sale; is it owner ordered, bank auction, foreclosures, will they accept a precaution offer
• ask questions, what is the reserve (sometimes they will tell you, sometimes they won't, what is the balance of the mortgage, if your are the high bidder will you get the property free and clear of any liens
•  what is the first deposit, what is what is the second deposit
•  is there interest on the high bid from the day of sale to day of settlement (this could be very expensive), there are times when due to a legal situation, the trustee can't settle the property immediately and it may take 6 months or longer, this means that you may be paying 1% or more per month until settlement.
• how soon will you have to settle, 5 days, 10 days, 30 days
• can you have possession immediately (you should get this, it will give you a head start on cleaning the property up and prepping for re-sale or rental
• will the auction company disclose any known defects (septic system failure, well failure, termites, water problems...etc,
• ask for a copy of the auction contract and forms you will be required to sign and read every word......make sure you understand what you are committing to do (many of those contracts have hidden clauses that will hurt you
• will they accept your business or personal check (try to get approved to use your checks (most auction companies require certified funds, if that is a requirement, get a certified check made out to you)
• make sure you have good comparable sales data, you need to know what the value is and what you can sell it for immediately if you have to, try to understand the repair cost also
• you may want to consider selling the property (assignment) before settlement
• set your high bid price and don't go higher
• check out your competition at the sale, most of these folks are professional buyers (predators) and will out bid you or give you a chance to out-bid yourself......be careful, try to get to know them (you will see them at every auction sale, they are really good at what they do. Ask for their business cards, learn about them. You will be better prepared the next time they bid against you. You may even want to get them to be your mentor.
• check MLS to find any history of the property; this will give you some clues as to what price the auction company is looking for. Talk to the agents who had the property listed. Ask them questions, who is the seller, what was the problem, how long was it on the market, how can you reach the sellers, let the agent know that you'll pay them a fee if they help you buy the property before the auction.....this will eliminate your competition
• be pro-active, do your research, don't just show up....you need history of the property before you bid, do this and you will succeed, do not do it and you will over-pay
• visit the property before the auction sale, try to find the owner, ask questions (sometimes you can stop the auction by making an offer to buy directly for the owner (always check the local laws about buying directly from owners in foreclosurs, you would be safe by using an agent, called arms length agreement, you pay the agent for this service.
• talk to the neighbors, find out what's going on, the history of the property and the ownership, neighbor usually love to talk and will give you some great insights
• Is the house vacant, for how long, can you get inside to do an inspection
• check the public records, what liens are on the property, what violations, back taxes, water bills etc
• if buying directly form the seller (using an agent), make sure you have a lien and title report to protect you from buying a property with other liens or judgements

Other ideas for you that may help you understand the auction business better:

• Contact auction companies (always talk to the principle of the company). 
• Do some research of that company; what do they primarily sell, stuff (assignments), antiques, coins, real estate, foreclosures etc.
• attend their auction, get to know them
• At my company we have auctioneer associates, their job is to run my leads and to create leads that we can sell at auctions. They are on commission only
• When you talk to the owner of the auction company, let them know that you are actively involved in real estate and would they consider hiring you on a part time bases and pay you a commission for every transaction you bring them.
• Make sure you have something in writing as to the amount they will pay you.
• Ask if you can become an auctioneer associate, ask if they will train you and if you can your their facilities to help get leads
• My auctioneer associate's average earnings is about $90,000 a year
• Use the Control and Roll system to increase your income.......that is control a property at a price that you feel you can sell for more, put it up for auction (while working for the auction company) and sell it for more, ( Example: your contract offer ----with special clauses and disclosures---is for $100,000, you book the property with your auction company and sell it at auction for $115,000, you make $15,000 equity plus 25% of the buyers premium commission paid to you form the auction company.  This means you have a great opportunity to DOUBLE DIP your fees and equity. Do this a few times a month and you'll make a ton of money.

• What if the property does not sell at auction? here are some ideas.....

• If it is a Trustee sale, go immediately to the office of the trustee with your written offer to purchase the property.
• Make sure your offer is all cash with no contingencies
• Make a copy of your deposit to be attached to the contract offer
• Let the bank know that a $5,000 deposit is being help by your lawyer or title company
• With your offer attach a HUD-1 to show the bottom line the lender will receive (remember you are paying all settlement charges). Ask your friendly title company to create a HUD-1 for you
• With the offer attach pictures of all the ugly things about the property; the landscaping, broken windows, bad walk ways, bad fencing, green water in the pool, any nasty pictures of the interior, the estimate amount of renovations needed
• Write a cover letter stating what you will do if they accept your offer; secure the property, insure the house, pay all cash, take care immediately of the roof problem, protect and secure the house form squatters, have the electric turned on, notify the water department, notify the local police to keep an eye out for vandals...etc.
• Since no one at the bank can make a decision as fast as you want, put a drop dead date in your offer. If this offer is not accepted or countered by January 1, this offer becomes null and void and all deposit help by the title company will be return
• Remember BANKS  are NOT human.......they are machines.....they don't really care about you or your money, sometimes I think they don't care about the house, there are too many levels in banks for anyone one person to make a decision (unless it is a small local bank or S&L).
• Send all your correspondence by certified mail, receipt requested
• You should also understand that banks usually do not have legal ownership of the property being sold at a trustee sale and that the final ratification is not completed until the sale is advertised and a judge sign the documents. This means, even after a sale at the auction, the door is still open to you to stop the auction with the cooperation of the the seller. More on this at one of my posts or blogs.

I am always available to answer your questions.......... Good luck.