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Updated about 11 years ago on . Most recent reply

User Stats

21
Posts
5
Votes
Justin Campiotti
  • Real Estate Investor
  • Los Banos, CA
5
Votes |
21
Posts

Foreclosure Auction Prices don't make sense

Justin Campiotti
  • Real Estate Investor
  • Los Banos, CA
Posted

I just got back from a foreclosure auction and I don't get it. All of the properties went for above fair market value/comps/zestimates etc.

I understand the properties bought back by the creditor when they weren't being bid up enough, but what is the strategy for the rest of the bidders? I can't imagine they are trying to flip the properties, and the numbers don't make sense to me to hold as a rental. The properties were spread out geographically speaking so its not a developer grabbing up chunks of land (I don't think). What am I missing. How are these buyers planning on making money?

Most Popular Reply

Account Closed
  • Investor
  • San Jose, CA
3,331
Votes |
2,097
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Account Closed
  • Investor
  • San Jose, CA
Replied

Hi Justin,

In today's fast moving market, Zestimate is way behind the curve in my opinion. The comps you're using might be a little dated.

Investors/flippers at the courthouse steps generally know what they are doing fairly well. You might think they are paying above FMV, but they may not. The profit margin on flips have been squeezed quite a bit in the last 18 - 24 months or so. There will be a day when these investors will get burn, but we're not at that time yet in my opinion.

Good luck.

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