All Forum Posts by: Quentin Johnson

@Quentin Johnson

So I’ve done a number of purchases at auctions.  So I don’t know what you know versus don’t… so will try to tell you how they go (point being: I’m not trying to talk down to you if you already know this)…

The auction is the legal process the lender uses to establish the fair market value of the property.  This is important, because if the winning bid exceeds the lender’s claim, the homeowner gets the difference from the court as equity in the property.

That is why the minimum bid is set to be the amount the lender is owed (usually).

If the minimum bid is not met, the lender gets the property and the (now former) owner gets nothing.  

Usually the lender incurs all sorts of costs maintaining the property through the foreclosure… legal expenses, taxes, insurance, etc.  so all those fees get tacked onto the balance owed on the loan.  So it is more common than not that a recent mortgage that defaults will not offer an investor a ‘winning angle’ to buy the property and be able to make money.  

I don’t see an angle on this property.., and given the purchase price versus the remaining mortgage this makes perfect sense.  The lender will remarked the property to recover as much of their funds as they can.  An investor is unlikely to bid on the property.

All the best!

Randy 

@Quentin Johnson

Where is the angle on this property when the monthly payment exceeds the rent by nearly $500/month?   I don’t see it for a hold.  Is this going to be a flip? 

Randy