Foreclosure Sales – I need an education

[Frank S.]

I own several rental properties all single family homes and considering another. However, I want to expand my real estate experience by trying a flip. My strategy is to purchase a foreclosure at our County Court House try a flip or keep it as another rental in my portfolio if that does not go well.

I looked at a handful of homes listed and plan on attending the upcoming sale – not buying – to see how this process works. However, I noticed that many of the homes appeared to be occupied?

Before taking this plunge I want to educate myself as much as possible on the risks involved in such a purchase. Can anyone give feedback on your experience or guide me to resources that can educate me?

Thanks!

[Jay Hinrichs]

@Jennifer Lee

  your perception is NOT correct there are no bidders at foreclosure sales that have inside tracks with the companies.. and if they do they are doing something very illegal that the FBI would be interested in.  what you described is a  drop bid... where your following a property and the opening published bid is say 100k you stop following it because its only worth 90K  so day of the auction your standing there and the bank opens at 47,500. and your thinking what the F... well that is called a drop bid.. the pro's I say that loosly the companies or investors that do this for a living and buy volume will understand that there are drop bids and be prepared to bid on every property going to sale.. that's the way you make money at the auction. and its one reason in most counties the casual investor is wasting time trying to compete with the guys that do it for a living.

some of my very best deals I got in Portlandia were this exact scenario I liked the property and even though the opening bid was way higher than anyone would bid.. I brought a cashiers check for what I would pay for it.. and low and behold a drop bid  all the other folks standing around are just looking at me as I walk my check up and snag screaming deal. But remember and you may want to look at Some of Brian Burkes posts on the subject to do this and make any money you need to usually have millions in cash.. it was not uncommon for me to take 2 to 3 million in one day to one sale and maybe only spend 500 to 700k that day but if the drop bid came in I was there to snag it.

So really tough for someone to hone in and want to buy one property.. and if they do they usually pay too much as the vets there run you up..

@Rod F.

  this is generally the case and a much safer way to do it and much more time management productive for the smaller investor.