Do any of you bid on site unseen auction properties?

Foreclosures
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Do any of you bid on site unseen auction properties?

Konrad R.
Orlando, FL · Member since 2016 · 70 posts · 5 votes

I've been to a few REO's in my area and they seem to be going higher than what the auction closed at. There have been bidding wars on a few of them. I know getting them prior to the bank owning them adds a lot of additional risk. I've noticed a lot of the properties up for auction do not allow for an inspection. How do you run the numbers if you can't see the interior? Do you just plan for worse case scenario?

I went to one house today. It was vacant, so I walked up to the house and looked through the windows. The interior looked in great shape. I noticed that the cleanout for the sewer line was dug up. Also, there was a note on the door from the utility company. It stated that the leak was after the meter and the water has been shut off. It suggested to call a plumber to resolve the issue. I'm not sure how significant the leak is. It could be a busted pipe underground. 

What are your thoughts on buying houses that do not allow bidders to look at the property?

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
10y

That's the nature of the beast on foreclosure auction properties.  Sometimes you can find an open door..... Other times it's occupied, and you can get a peek inside.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y

    That's the nature of the beast on foreclosure auction properties.  Sometimes you can find an open door..... Other times it's occupied, and you can get a peek inside.

    1Reply
  • Percy N.
    Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
    10y

    @Konrad R. once you take a look at the property as you have, try to estimate a worst case rehab estimate and if the numbers still work, bid on it.

    Usually the discounts for these properties is higher, so rehab budgets can be bigger.

    1Reply
  • Al Wilson
    Investor · Daphne, AL · Member since 2014 · 1k+ posts · 242 votes
    10y
    No. We always look first. Too much risk otherwise. Good luck.
    0Reply
  • Kim MartinPro Member
    Rental Property Investor · Wenatchee, WA · Member since 2014 · 157 posts · 53 votes
    10y

    I always look. There is too much risk as it is. Always budget for worst case scenario. Good luck to you! Auctions are fun!

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  • Nick L.
    Buy & Hold Investor · Milwaukee, WI · Member since 2012 · 378 posts · 179 votes
    10y

    @Konrad R.The uncertainty is part of the reason that the price is often so attractive. 

    I recently found a sheriff's auction similar house to yours - looked in decent condition as far as I could tell from the exterior and peeking through a window, and the price was about 50% of what it would go for at retail. Like @Percy N.suggested, I figured there was room in the budget for a big rehab if required. 

    On the morning of the sale I discovered that last winter a second story water pipe had burst, filling the house with water that spilled right out of the first floor windows. Between the mold, structural consequences and ruined mechanicals, that house is probably worth more scraped than rebuilt. So I got a lucky escape from that one - some other sucker bought it.

    With that said, there are often ways to find out about properties before auction. You can give a tenant $20 to let you in. You can talk to an agent who had it listed recently. You can call utility companies to see whether the heat is on. So you always take something of a chance but you can often stack the odds in your favor.

    This guy has the right idea: https://www.biggerpockets.com/forums/223/topics/273207-successful-sheriffs-sale-was-the-only-guy-there

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  • Uriah D.Pro Member
    Investor · Apex, NC · Member since 2014 · 340 posts · 188 votes
    10y
    Konrad R. Every week. You need to at least drive by and look around. Get a master key if it's vacant and try to get in and take a bunch of pics. Turn on your geo location so you'll remember which house is which. After 10-20 houses you'll forget really quick. Also I've found if I dress professional and walk around taking pics with an iPad (phone doesn't work) of a vacant house neighbors generally think I'm with the bank or the companies the banks hire to secure the property and winterize. I also conceal carry and have walked into many a house that I thought was vacant, but wasn't.
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  • Merry Briotta
    Investor · Lebanon, OH · Member since 2015 · 80 posts · 26 votes
    10y
    Uriah D. Get a master key and try and get in? Folks - for very obvious reasons - I would NOT follow this advice. Wow...
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  • Uriah D.Pro Member
    Investor · Apex, NC · Member since 2014 · 340 posts · 188 votes
    10y
    Merry Briotta I said vacant houses.
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  • Merry Briotta
    Investor · Lebanon, OH · Member since 2015 · 80 posts · 26 votes
    10y
    Uriah D. Owned by who?
    0Reply
  • Uriah D.Pro Member
    Investor · Apex, NC · Member since 2014 · 340 posts · 188 votes
    10y
    Merry Briotta Well if it's a auction house, of the non judicial type, there would only be a few options. The people getting foreclosed on or possibly an hoa.
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  • Merry Briotta
    Investor · Lebanon, OH · Member since 2015 · 80 posts · 26 votes
    10y
    Uriah D. And you think it's ok to enter a property (by using a master key) that you don't own? Without the consent of the current owner?
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  • Uriah D.Pro Member
    Investor · Apex, NC · Member since 2014 · 340 posts · 188 votes
    10y
    Merry Briotta I'm not trying to get into an argument here, but we are probably playing on different fields when it comes to the acquisition of properties. Seems you have a couple rentals and a duplex, which is awesome. I'm also guessing you bought those through a real estate agent? Maybe not, but were you able to preview the property before hand? I've literally bought hundreds of houses at foreclosure auctions. I try to find out every bit of info I can before bidding as others have mentioned before. No, I am not trying to get into houses that are clearly occupied, but when there are stickers all over the front door stating the property is vacant and sheriff postings in the Windows stating the property is vacant, yes I am going to try and get in to see the condition. Also master key = credit card.
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  • Merry Briotta
    Investor · Lebanon, OH · Member since 2015 · 80 posts · 26 votes
    10y

    @Uriah D.

    I am not trying to argue with you either and this will be my last post on the topic. But certainly you realize what you are doing is illegal?  You can't enter someone else's property without their permission. Vacant or not. In foreclosure or not.   

    Don't believe me? Call your local PD and see what they say. Would you enter a vacant property that was listed on the MLS?

    I own 5 properties and 1 of those has been purchased with the assistance of a realtor. Although, not sure your point of that?  You have more properties so you get to break the law?  

    I get and agree that one needs to do their due diligence before buying a property. But that doesn't mean you get to break the law in the process. 

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  • Uriah D.Pro Member
    Investor · Apex, NC · Member since 2014 · 340 posts · 188 votes
    10y
    I guess everyone else that does this is leaving me out to dry. Best of luck to you merry
    0Reply
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