Anyone With Extensive Knowledge Of Live Auctions?

Question

Hey Everyone,

I wanted to see if anyone is consistently attending live auctions and has extensive knowledge regarding them? My partner and I have been attending some over the last few months, but I still have specific questions about different aspects.

I would love to have a conversation with someone educated with auctions and maybe be able to pick their brain. Also, I would like to know all of the local auction companies that host the auctions. I know of several that I check regularly and would be happy to share.

Thank in advance.

Jay Hinrichs · Answer

@Jeff Filali  my people do all of that I could not do that myself.. too impatient... LOL

I had my title company do a excel spread sheet for me they updated daily.

Every NOD in our 3 county area was put on that... then they would put the critical info

date of sale

first or second or what have you

IRS  yes or know

any other liens the amount and who too.

so we just popped that open daily and ran with it... then we created our own bidding data base which Elody ran.. so I would get e mail from here the night before  OK be at Washington county for a 10am its number 20 on the list... opening bid 220k... I would order the checks.. be at the bank at 9am pick up cashiers checks and go.

in the other counties I had staff go to those we may buy 3 in one day in three different counties.. its was draining I can tell you that and a ton of work..

at that point my CPA sat me down and said you have 10 million in cash out working and your only making 1 million a year.... that is not the best use of this money.

and he was right I took that cash went to the banks leveraged up 4 to 1 and started a HML company that I could make 15 to 20% on levered money.. far more profitable and far less work.. although when 08 hit.. I took a bloody beating just like every other bank..

Rich Hupper · Answer

I agree with @Jay Hinrichs almost every live doorstep auction I have been to in mass gets bought back from the bank. The opening bid is far too high for it to work for an investor. After that, could be weeks or months, it is given to an auction site for public bidding or to a broker who lists it on the MLS, or both. In mass you will see a lot of properties on hubzu.com auction.com homepath.com or xome.com. I am sure there are others too.

Jay Hinrichs · Answer

@Patrick Wheeler  I have extensive knowledge and practical experience I bought my first one in 1979.

that all said.. the foreclosure business is a business .. to be successful you must follow every single foreclosure in your market and be prepared to bid on each one..

reason is 99% will never go to sale..

if you hone in on one property 90% chance it wont go .. bank over bids.. another party out bids you.

etc etc..

tough business and only way to make a bunch of dough frankly is if you have a few million in cash to bid with.

Now bunch of money I mean 300 to 500k a year in profits

Jeff Filali · Answer

I've purchased around 6-7 properties from various auctions.  From my experience most of the initial live auctions on foreclosures are a total waste of time, the banks usually have a set number and buy the property.  As for bank owned properties, they almost always have a reserve even though it may not say that in advertising for the auctions.  You can find some deals, but you have to really work the auctions, do your research and know for sure before attending and be ready with cash to close fast.  In the better markets, there will be a lot of investors bidding and the prices usually aren't that good.  But like I said, hit a lot of auctions and you'll find some deals.  Good luck!

Rich Hupper · Answer

I wish i could say I have extensive knowledge but I have been to many of these and still do not understand them.

Bumping this post. Hopefully there is a season auction buyer on the forum

Patrick Wheeler · Answer

Account Closed Yeah our continued main focus is to reach these sellers before the auctions take place or just homeowners in general.

Account Closed · Answer

@Patrick Wheeler   As a general rule, this is not a good time in the real estate cycle to buy foreclosures.

In Collin County where I live, there is probably more than ten times the amount of money at the auction than would be needed to buy every property that can be sold.

If you really want to make money, contact the owners before the auction.  You might be able to at least see in the property if you cannot buy it from the owner.

I love to gamble, but there are people at my local auctions that have no problem spending $5,000 to $750,000+ on homes they have never seen.

Patrick Wheeler · Answer

@Michael Saracino Very helpful! Thank you for taking the time to write all that. Hearing from the perspective of an attorney is probably the best insight into foreclosure auctions.

Michael Saracino · Answer

I've yet to place a bid, let alone purchase a property at a foreclosure auction. So I don't have a lot of experience to share from that side of things. But, I do foreclosure work with my law firm so I can share some info from that perspective.

First, and maybe you already know this because you have been attending over the last few months, but it's not uncommon for auctions to get called off at the last minute. Just in the last few weeks I've had a couple where the owner declared bankruptcy just hours before the auction. Once that happens, auction is off.  Or the owner may have cured or signed a loan modification in the time in between the publication of the notice of sale and the actual auction date. My tip here would be to call the auctioneer or the law office before you leave for the auction so as to not waste your time.

Along those lines, keep in mind that if you are just looking at the legal notices published by the law firm, they are not required to publish a new notice of sale indicating the date for which an auction has been postponed. The auctioneer will likely run a new ad, but it won't be in the legal notices if that's where you are looking for your info. Keep in touch with the auctioneer or attorney to get the updated scheduling info.

As others have stated, my experience has been that the bank will set a number, their highest bid. Obviously you have got to get past the bank in order to have a shot at winning. My experience is that the attorney for the bank will submit that bid. The attorney cannot disclose to you what that number is prior to the auction, and also may not share the amount due on the loan. I have yet to attend an auction where the bank does not win. But, it's a small sample size given the number of auctions that are happening daily. I can't speak beyond my own experience.

To answer a more direct question regarding auction location. MA is a nonjudicial foreclosure state. There's no sense in having the auction at the court, since the court is not involved in the foreclosure whatsoever. In fact, the bank (though it's attorney) is required to make an open, peaceable, and unopposed entry upon the property for the declared purpose of foreclosing upon that property, prior to the auction. This is why you will always see it at the property.

Lastly, if you do end up eventually purchasing at a foreclosure auction, make sure you have a good attorney. One that understands foreclosures and the title issues that could arise. When you go to resell, any good buyer attorney will investigate the foreclosure, and any defects really could cause problems for you. The foreclosure process in MA has a lot of critical steps and it's absolutely necessary to make sure everything was followed properly.

Good luck!

Patrick Wheeler · Answer

@Jay Hinrichs Yeah in Mass there are daily auctions so I'm currently focused on trying to build a small team to be able to cover a much larger volume of auctions.

@Jeff Filali That amount of purchases in the past 10 months is encouraging to me at least. Right now I believe in attending auctions as potential leads so trying to put in the work. I'm the one that currently does all the research and looking for ones to attend.

Anyone With Extensive Knowledge Of Live Auctions?

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