TEXAS - Wholesaling a Foreclosure before Scheduled Auction

[Craishia Millines]

Hey guys,

I have two appointments this weekend with sellers whose homes will be going to Foreclosure on 10/1. They both have existing mortgages + delinquent taxes - I am wanting to see all options (wholesale, subject to, etc) I can exercise to retrieve the homes and also get more clarity on this question -

Why would I purchase their home (after covering the mortgage) + tax liens when I have a possibility to win it at auction for a possible fraction of the price? What am I missing in this equation? For example, if they owe $100,000 from the mortgage + $3,000 delinquent taxes but the minimum bid is $3,000 at auction, why would I just not try my luck at auction and save that $100,000 at auction since the bid likely will not go this high?

Lastly, does anybody have a specific Option to Purchase Agreement that they use? I am going for the $10 option money and want no penalty other than to lose that $10 if the deal falls through. This is my first wholesale and I do not want to hold up the seller if I cannot find an end buyer and they have no other option but to lose their home! 

I believe I have enough time to finish this deal out but the clock is ticking, anything helps! Thank you in advance! 

[Wayne Brooks]

Originally posted by @Craishia Millines:

@Wayne Brooks The logic behind it trips me up. I’ve been to the auction before and seen a home worth at least 210k go for 7k. Crazy. 

Then you are missing something, there are a couple of reasons.....

1) it could have been a junior lien or an hoa foreclosing....in which case the buyer inherits the first mtg balance

2) here, the bank usually announces how high they will bid, say $180k.  The opening bid may be the required fees and such owed for the actual court process.  Since everyone knows the bank will bid up to $180k, if they are not willing to bid that high, they simply don’t bid.  Many foreclosures end up here with a sale “officially” for $100, back to the bank for this reason....but that doesn’t mean you could have bought it for $200.