Residential Real Estate Agent · Chandler, AZ · Member since 2009 · 1k+ posts · 928 votes
They are now doing a reality show on the Phoenix auctions. A friend told me once they started Storage Wars, the number of people at auctions tripled. This is good for bidding services but bad for investors. Time to move or start a bidding service.
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: “I skate to where the puck is going to be, not to where it has been.”
-- Warren E. Buffett, The New York Times, 10/16/08
That is too bad! of course, the competition is already so fierce, it is difficult to get any deal that makes great sense these days. Many of the properties are going to buyers at 85% and up of exit value which is way too much to pay in my book.
1) The auctions that will get the influx of the "idiot buyer" types that drive up price are the Hudson & Marshall, Williams & Williams, and Auction.com type of auctions, not the courthouse steps. Why? Because these are private companies trying to maximize profit, as opposed to trustees trying to minimize loss.
2) While you may be able to buy a "widget" from a storage unit with the cash you have on hand, I doubt the amount of people willing to place their 100% cash bets on the highly specialized niche of buying at the courthouse steps will triple because there is now a TV show about it. You have to have a cashiers check to qualify, and you have to qualify to bid.
I really don't see this as a problem.
Also, Will- we get way better than 85% of exit value. Happy to send you the spreadsheets if you'd like.
I agree Will. Competition is incredibly high. I bid on a property yesterday that was worth 205K and sold for $184,600, occupied and no views of the interior.
Jake
I think you will find "idiot buyers" everywhere. Also there are too many loan programs out there now to where you do not even need close 100% cash to buy. Plus the bidding service only need to qualify not the actual buyer. Keep in mind in AZ, we only have to put down 10K with a winning bid and the balance is due by 5 PM the next day. Lots of time to get loans and other peoples money.
I just wonder how they'll make it exciting enough for TV. Now, if they sent Barry Weiss to go make it interesting, I might have to watch.
I don't know if I'd be as concerned with the competition at auctions increasing as much as the competition in Phoenix in general. It's just more publicity that's telling people to buy in Phoenix. From the blogs on this site, it sounds like the auctions are already too crowded there.
Here is Vegas is just like Phonix, Az. Its over leveraged. people are paying way too much and yes the real deals almost dont exist.
As for REO's, the banks dont really give out that much discount either on them. At least not in Vegas, it could sit for 8 to 12 months, you submit an offer, you get a multiple counter offer to submit best and highest which is a tactic to have you bid against yourself. you dont raise the bid, 10 days later the house is still sitting
as for short sales, again banks require a Min net based on a BPO they have on their books and if the asset manager smells you are looking for some discount or making some money, they decline the deal...It is just a system, so many monkey at very low level working these assets now these days that have no clue about leverage and velocity of the money. that's why our economy is recovering very slow.
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: “I skate to where the puck is going to be, not to where it has been.”
-- Warren E. Buffett, The New York Times, 10/16/08