Buying at foreclosure is EASY!!!!

[Rich Weese]

B.S.!!!! It is easy to buy at the courthouse steps , just show up with cashiers checks and raise your hand!
However, it is also very easy to lose your shirt. I attend and buy at my Texas county foreclosure auction the first tuesday of each month. This is an open invitation to come watch a pro do it next tuesday the 5th. PM me if interested.
Here are a couple examples.
1. Last month, a newbie bid around 40K on a house worth probably 200K. Great deal, right? He hadn't done his homework!! (now it gets funny) It was for a SECOND mortgage that was for a swimming pool and landscaping on the 200K home the homeowner had taken out. This bidder had paid off the homeowners' pool loan. He gets nothing for his money, and the homeowner got a free pool!
2. A couple months ago, a guy bid around 40K for a 100K home and was high bidder. He had missed an IRS tax lien that was over 100K. He had to pay the lien or walk away. He walked.

I say this as a word of warning to all. I have a staff of 3 people doing the following, just to get ready for next tuesday. 21 days prior to sale, a lady goes to the courthouse and compiles the list of foreclosures due for auction.It takes her about 4 days. I purchase the list from her for $150. There are 109 pages and 652 homes this month. My staff then fans out. One begins checking a website for brs, baths, garage, square footage, yr built and lot size. Another begins researching taxes owed on another website. The third goes out and takes photos of the homes I've designated I'm interested in. 212 this month.
The info is then added to the list and re-sent to me as well as the photos. I then begin my chart of properties and match pics with the info. and determine my max price I'll pay. I eliminate some from viewing the photos for various reasons. I'm now under 200.This process takes about a week.
Once I have my list of 200 properties, I make arrangement with my photo person and I go with him to view each home, neighborhood, comps, and homes in area for sale or rent.I make adjustments to my price and add any changes I make notes on my list. Is home vacant, ramsacked, meth house next door, etc. My other 2 people are now researching any liens; i.e. judgements, child support, tax liens, etc. If they miss a single one, I may be screwed.This takes another week approx.
That brings me to today. I have to determine my bidget for this auction and order my cashiers checks. This month, I'll take approx a half million to buy properies. I just ordered 52 cashiers checks of varying amounts from 100 bucks to 50K.
Now I'm ready for the auction and the fun begins. In TX the auction is a 3 ring circus! It starts at 10 in the morning and you may have 2-3 trustees all selling their properties AT THE SAME TIME! You don't know the order properties will come up, or even if property you want, will come up at all. Bank may postpone the same, homeowner bails it out, or declares BK, etc.
Because there may be 3 trustees, each of my staff has a chart with my target prices and hangs out at a different trustee. We have to constantly communicate to make sure we don't exceed our budget- you must pay at conclusion of auction. I've done all this work and maybe not bought a single home. The most I've bought at 1 auction is 5.You also have to constantly know what denominations of cashiers checks you've spent. No change is given for overpayments for weeks, and you must pay for each home separately.
If you get one, then you go , after the auction to see what you bought! If there are people in the home, you go to the door and chat. Some won't be happy, and some won't even know what happened. I've bought homes where there was a tenant. Owners had been collecting the rent and not paying mortgage. Tenant wasn't aware. You have to post the eviction notice and get the folks out.
Finally, after their departure, you get in the house and see what you have. I have a 2 man crew to do the repairs, painting landscape etc. The home is repaired and you're ready to sell. Except, by the time all this is done, the market has changed and loans are no longer available! Now , you either rent it out or continue carrying the home while you try to find a buyer. Doesn't all this sound fun?
I'm posting this to help save aggravation in would be auction buyers. It is not for the faint at heart. I've invited all BP members to come watch and I mean it. If interested, PM me. I'll be attempting to buy. May 5th, at 10 am in Hidalgo county TX. I buy here because it has been rated # 1 for appreciation for 3 years running by many sources. Maybe I'll see you here! Rich

[J Scott]

Originally posted by Rich Weese:

...if you just want to buy from the bank that overpaid for the home to begin with at the foreclosure sale! Think about it. If the bank ends up with their bid WINNING, it means no one else was willing to pay more.

For other who may not be familiar with the process (I'm sure Rich realizes this), this isn't completely accurate...

For example, let's say a property is selling at a foreclosure auction with the bank bidding $100K (this means nobody can buy the property for less than that). And let's say that nobody is willing to bid above $100K, so the bank gets the house back.

While it may be true that the bank's purchase price of $100K wasn't a very good deal (as Rich pointed out, the bank "overpaid" for it at $100K), that doesn't mean that investors won't have the option of picking the house up as an REO for much less than $100K.

In fact, the bank will probably list the house on the MLS at between $70-100K (given the scenario above), and if there are no takers, the price could easily drop by another 50% or more.

So, while investors had no opportunity to pick up the house for less than $100K at the foreclosure auction (which wouldn't have been a good deal), they very well may get an opportunity to purchase that same house as an REO for $50K or less.

And buying REOs is *much* easier and less time intensive than buying at auction (in my opinion and experience)...