June county auction, paying cash...any advice pls.

[Roberta Langford]

Hi,
I am taking the plunge for first property in TX. I work in the healthcare industry, and I am the driving force on this--hubby is a stock investor. But he is supportive and agrees diversification is good.
We own our own home, have no debt. I have about 110k in cash--will pay via cashier's check. A real estate agent advised auctions , and buy on open market instead--to divert potential problems. I could borrow for future properties if I own 2 properties free and clear. Also realtor said to save cash and get a loan, but if I can buy property for 20+% less via foreclosure I would prefer that personally. Nevertheless I am turning in loan application for pre-approval currently--but looks good for future financing.

I know the home values in the open market on the 3-4 SFHs--I would like only one. I have attended a portion of the county auctions in April and May to see what it entails/ & feel less intimidated--read BPs wonderful forums when possible. I have checked old forums and found something re: title check.

I have scouted the pages at the county deeds/liens onliine each SFH of interest. Though had some confusion on abbreviaton-- nice co. clerk said to come in and would help me check onsite at co. courthouse.

So anything else I am forgetting...title search? Please help me and I hope to return the favor in the future. I am losing sleep and fingernails ;(--and want to make and an educated

[Brian Burke]

Roberta Langford, a few years ago while waiting for the next house to get called at the auction, I struck up a conversation with a woman that I had never seen at the auction before. She told me a very similar story to yours. I counseled her on the risks much in the same way I did in my previous post. I didn't see her as competition that needed to be scared away, I buy a lot of houses so a "one off" investor doesn't cause me to worry--I'll just buy the next one. But I just don't like to see people put themselves in undue risk.

Of course I knew what would happen. She would wave me off and just assume I was trying to scare her away, and she would just buy something anyway. I could tell by the questions that she was asking that she was in way over her head.

Then one day, a house came up for auction and she was all over it. I even said something to her about this one being a junior lien, but she didn't want to listen. The balance of the first exceeded the property's market value by almost double, so the second she bought was worthless. She lost all of her money, I don't remember the amount but it was between $100K and $200K. When the first ended up foreclosing a few months later, she didn't even have the money to bid on it. Sad.

I just think that people need to understand that buying at auction isn't a purchase transaction, it is a legal transaction, and you are only buying the title that was held by the lien that you are bidding on at the time it was made.

All of that said, the first time I bought a property at auction I really had no idea what I was doing. Sure, I had studied the auction business for five years before I bid on anything, and I had followed every foreclosure auction in my county during that five year period and had searched title on every one of them just for practice, but I didn't even know what I didn't know. I was lucky, it worked out for me. Maybe it will work out for you. Like I said, just be careful.