All Forum Posts by: Bao Nguyen

@Jesse T.  I totally agree, and this is what I'm seeing at the auctions. Are the stories of people buying $100k properties for $50k myths, or rare one-offs? Before attending these auctions, I was under the impression that I could get $100k properties for $50k "fairly often".  Guess I was too naive. 

@Wayne Brooks  I wasn't aware that banks are only allowed to bid up to what they are owed.  Makes sense why some of these might go for way below market.  And you're right, I'm seeing 99% of properties sold at auction are 75% of market value - most of the time 150% or 300% of market value.  :-)

@Robert Leonard  Ok, perhaps I was exaggerating a bit with the $100k property for $10k example - but I have heard from local investors that do attend the auction that they have purchased properties for under $1000, and I've personally seen some of them buy $50k properties for under $10k at the auction.  I'm quite sure these purchases were on a 1st lien because the foreclosing party was Fannie Mae (and if I'm not mistaken, Fannie Mae only does 1st position loans).  But like Wayne said, if the bank isn't allowed to bid what's more than owed, then this makes sense why these properties would auction for way under market value.  

The $55k offer I made on the $61k house details:

http://www.realtor.com/realestateandhomes-detail/4...

The house has been vacant for 7 years, and the roof is caving in, making for more damage/mold with every rainy day.  It's not bank owned yet, it's a short sale.  Original asking price was $80k or something like that - way over priced.  My offer was for $55k, and the bank accepted originally, and then kept me on the back-burners for 2 weeks while they fished for higher offers (they updated their listing to show $61k asking price from $80k AFTER they accepted my offer).  I withdrew my offer after 3 weeks, and now the property is still on the market, for $65k.  It's the middle of winter, I doubt anyone is willing to buy a rehab project with 12 inches of snow and 10 degree weather outside.  But I could be wrong.

It makes sense that the banks are in the business of lending and not real estate.  However, ever since 2008, I have begun to believe otherwise.  Case in point: I made an offer of $55k on a $61k foreclosed property - only to have it turned down.  The property has been vacant for 7 years - ever since the crash, and the property is only getting more damaged by the day (roof is caving in).  The offer was made in the middle of December.  The bank won't be able to sell this property until spring or summer, or if at all.  

Bottom line is, banks are holding onto properties even more tightly the shrewdest investors who are trying to sell their properties.  They are landlords, without tenants.  

I believe most realtors would agree with me: banks are pricing their foreclosed properties quite high in many, if not most, scenarios, and they are refusing to negotiate much, if at all on prices.  Banks are not in the business to sell quick; they are in the business to hold on to properties indefinitely if there's any chance of a higher selling price.  

It still makes no sense to my why a bank would let a $100k property go for $10k at auction when they don't even accept $55k offers on a $61k property.

Anyone working closely with banks (HUD/Homestead/Foreclosure Realtors?) care to give any insights on this conundrum?

I agree to some point.  I have a very curious mind, however.  And if it weren't for me wondering "why" and just happily bid, I'd be the proud auction winner of a couple of 10 cent on the dollar auctions for 2nd liens.  :-)

 Let's say the house is worth $100k, and $10k is owed.  Why would the bank bid the minimum of $10k and let me walk out a happy guy with the property at $11k?

I hear stories that people have bought houses for 10 cents on the dollar at sheriff's sale/auction.  How is that possible?  

Why would a 50% equity homeowner default when he/she could put their property on the MLS at 75% market value and sell it in a week? That owner would still make out with 25% of the value and save his/her credit.

And if this were somehow possible, wouldn't the bank just bid up on this property until (say 75% of market value) and then let investors take if they still want to outbid at that point?  Why would a bank let someone outbid them at 10% market price?  or even 50% market price for that matter.  I've had banks turn down my offer of $55k on a $61k foreclosed property (and distressed!).  I can't imagine that same bank letting an investor pick up that same property at sheriff's sale for $15k or even $25k.

Let's assume we're talking about sheriff's sales for 1st liens, and not the unwanted scenarios where the sale is for the 2nd or even HOA fees.

@Sam Leon @Aly W. hey hey guys...let's keep it together here.  off tanget, and furthermore, I'm not able to join that lunch.   Focus ppl!  :-)

@Marcia Maynard Some good points.  Thanks for sharing.

@Marcia Maynard Thanks for the tip Marcia.  Question for you: by inspecting the property, do you mean drivebys or actually entering and seeing the inside?  I can understand driving by every so often, checking up on the outside, to make sure the property is clean and presentable. 

As for the inside, I really don't like entering my tenants' homes - it's an invasion of privacy in my opinion, and I'd like my tenants to feel like it's their home and they have the right to not have anyone come in.  I've been renting for 15yrs myself, and I empathize a lot with renters.  I would imagine that the security deposit would cover the inside damages.  There will always be bad tenants, and I believe that a good tenant screening can filter out 99% of the types of tenants that destroys homes.  So having regular inside inspections is to prevent/catch that 1% - in my opinion, it's not worth the hassle and upsetting good tenants to prevent that 1%.  What's your thought on this?

@James Syed I agree with you James.  I think my area is similiar to yours.  But in more urban areas, as others have confirmed, 1/1 are good money makers as long as you are ok with being a more active landlord.  I'm lazy, I want to rent and not see the property again for a year, 2 or more if possible.  :-)

@Dave Alexander Abuse my agent until he speaks up? lol.  Not a bad idea..haha! But I still feel bad.  Although you're right: I do have the tendency to worry more than necessary.  Agreed, not worth it to be a licensed Realtor if I'm not going to make it my full time job as well.