Buying a house prior to Auction?! How have you or would you do it

[Jeremy H.]

Recently I've been trying to get more leads into the funnel and ideally close more deals faster. I'm having much better success with off-market as opposed to the MLS - my most recent strategy and a big one for 2023 is going to be buying (or attempting) at the sheriffs auction.

I will also have my RE license in January so I can tour my own houses, make my own offers etc. Probably going to start with 3 or so offers a week until I can get 5-10. 

This leads me to the sheriffs auction...the problem I've had is there have been a few good houses go up to be auctioned, then a week or so prior to the in person auction the house will come off the auction site and show as "pending" on zillow. So someone is picking up some of these prior to auction (I guess on some of them the deal falls though because they will end up back for auction). There will also be some houses that pop up as "pending" on zillow for around 60% of the ARV, but the house is already pending before it's listed (it arrives on the site as "pending". There's something going on - I'm just not sure exactly what.

So to the question...Let's say a house pops up on the auction site - it's a good one. To get an opportunity prior to auction - is it as simple as knocking on the door and getting an offer agreement signed? I'm sure you would have to offer more than the mortgage balance or you're looking at a short sale? What should the relevant contingencies be - inspection and a clean title is what I'm thinking. These would be cash deals and I would rehab the house and ideally turn it into a LTR or flip. 

I know there are some good strategies out there - I am just a little unclear on what to do after knocking on someone's door whose house is going to be auctioned in the next 2 weeks or so...

[John Slater]

Quote from @Jeremy H.:

Quote from @John Slater:

@Jeremy H.

Consider getting to them before auction is posted. They are 90 days in pre foreclosure before sale date is being posted and for me that’s the time to get out and door knock to see what’s going on and whether a deal could be made.

Auctions are great in Cali right now. Big investors aren’t playing yet but they will in 6-12 months. I’ve been seeing a lot of sales 60-67% of value, more than the loan value but still at good numbers if you can get to auction to buy.

Get with a title rep. Mine will pull pre-Lims for me showing liens against property to make sure bidding at auction makes sense. I then do a drive by, door know to try and get a scope on condition of property. From there, calculating my best offer before walking in to auction.

Exactly - getting to them before the sheriffs auction is the plan here. I think this takes more time and has a lower success rate than actually going to auction - but I plan to do this with the ones that have something "great" about them - location, size, condition etc. So it sounds like this is just door knocking with a purchase agreement and making a deal - is that accurate? Then the house is "pending" and you essentially have it locked down, but you must get the house paid etc before the auction date. 

I'm just thinking the lender has top be involved somehow here, but I'm not sure why. I mean you could find yourself making a deal that is just not enforceable/valid. How do you prevent that?

 The closer to the sale date, generally the more motivated to do something about it, in theory... but watching Auctions right now and seeing houses go to sale with masses of equity just doesn't make any sense.... Most of the time people don't want to sell when you door-knock, want versus need are two important sides, and its unlikely to be a good convo and "sign this purchase agreement", more a dk one day, back the next week, and maybe more dk's in there before a decision is reached to sell.  I'm door-knocking some auctions right now around 10 days before sale date... still time for me to jump in if they want to sell before sale date, but if not I can at least check out the property to get an idea of condition before going to auction, so its more like auction recon, with the added bonus of potentially speaking to owner and working something out before Sale date.