How do you prefer to buy your foreclosure?

[Derek Carroll]

Pre foreclosure, short sale, at the auction, or REO. And specifically, why?

[Patrick L.]

However I can get the property the cheapest is fine with me.

Short sales can lead to a great deal but they can also lead to a giant waste of time. Sometimes banks have motivation to get rid of properties that have become complicated foreclosures. Sometimes BPOs can come in way off the mark, either high or low. There are a lot of variables with short sales.

I like buying at auction where nobody can see the inside of the property. I think my experience gives me a better assessment of the property than the average investor or BPO agent that the bank is using. It's a big of a gamble but if I can get an appropriate discount then I have no problem. It also weeds out the buyers that don't have immediate cash (payment is due in less than 24 hours here)

REOs can be good, a bit more competition at this stage. I tend to go for the bigger rehab projects at this stage that others are scared of and the bank is eager to unload.

Just yesterday I got an REO under contract in a neighborhood I have numerous rentals in. I scouted this property before the foreclosure auction and had a number in my head. It exceeded that number and ended up going back to the plaintiff after another bidder drove it up a little above my number. The bank had it on the market for 2 months at an inflated price so after a couple of price cuts I hit them with a low ball offer which was even lower than what I was willing to bid at auction and they accepted it. Final sale price was 31% lower than what the second highest bidder was willing to pay at the auction.