Bidding on auction.com occupied property

[Steve E.]

Hello all,
I am watching this property and the status is occupied, the listing says do not disturb the tenant. Also no title insurance is offered at closing. It is a reo but then I did a title search by the last owner and it came out clear. The house had been foreclosed in 2009 and I drove by it and verified people are still living in it. After foreclosure how come the bank did not evict for such a long time. The comps shows this property at around $320K and the bidding started at $99K and currently at $154K. The reserve has not been reached. I have couple of buyers in mind I can wholesale this.
What do you all think? I am pretty new to auctions and foreclosures. I am worried about the condition of the property and what will it take to evict the current occupants? With these unknowns how much max should I bid?
Thanks

[Account Closed]

No disrespect intended, but ignore what Jack wrote. He should of done a personal property eviction if anything had actual value and whatever a bank pays at the courthouse steps is pretty much meaningless after it is an REO.

The reason banks sell a property occupied is because of a law passed in 2009 that covers i think up to the end of 2014. Though I'm not a lawyer or well versed in all the details, the law talks about that tenants can't be evicted from a federally insured loan that foreclosed unless the new owners are going to occupy the home or if there is no physical lease in place. Typically, whatever lease if it is at "market value" has to be upheld for a year (typically the length of the lease which should be less than a yr left on it).

So with the above said, if someone is in the house, and they can't make a cash for keys deal stick, they simply rent the house to the tenants. Apparently, auction.com worked out a deal to tap this inventory in hopes of turning over some of it.

With the comps showing the property at 320k and the current bidding at 150k, i'd be more worried about what the RESERVE is. I typically see auction.com stuff going no less than 70% of a previously listed value. Add in the auction.com fee and it makes the numbers a little tight for my likes.

As for dealing with the tenants. Keep in mind they haven't done anything wrong and usually are still paying rent to someone (typically the bank). I'd talk to them if the bid looks like it is going to be accepted. Either figure out a cash for keys, or a rental price/terms that make sense for everyone and move forward as best you can. As an investor looking to rent a house, they would seem like assets to me.

As for paying them 50 bucks to leave...good luck with that, i've dealt with maybe 40 cash for keys situations last year and nobody left for under a grand plus a few weeks of free rent. Except one guy, he left after his girlfriend answered the door and I later that day figured out he was married. He left that weekend.