Foreclosure auctions (public)

[TeamAmerica]

Do we have any experts on here? I am looking for opportunities to find foreclosed land or rentals.

My hope would be to buy for cash and then refinance later. Appreciate any input or advice on the matter. Would love to find a "mentor" in this area to start building a portfolio that can generate some cash.

Is every county/auctioneer different about what deposit/cash is due at the auction and how many days to close?

I assume the only inspections are drive by? Or will the trustee ever allow a full inspection before the auction?

Will the lender always bid at least the amount of the outstanding loan?

I may go and watch some to get a feel for process.

[Hudson05]

If you've never gone through the process, I would recommend a wholesaler to do your first. New Western is one of the largest. They take a fee and people say what they will about wholesalers, but for my first flip they really took me through the entire process, had established lenders, insurance providers, appraisers, etc. in place who are accustomed to dealing with flips. after your first you will have built up relationships that you can use on your own and you will know the full process and understand some of the potential pitfalls and areas that you will be able to streamline costs on your next one.

[TeamAmerica]

If you've never gone through the process, I would recommend a wholesaler to do your first. New Western is one of the largest. They take a fee and people say what they will about wholesalers, but for my first flip they really took me through the entire process, had established lenders, insurance providers, appraisers, etc. in place who are accustomed to dealing with flips. after your first you will have built up relationships that you can use on your own and you will know the full process and understand some of the potential pitfalls and areas that you will be able to streamline costs on your next one.

Thanks. When you say Flip, can that mean rent and/or sale? assume the process would be similar in either case.

[BlackoutRam2500]

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[ramrod]

With the popularity of the house flipping shows, I bet the deals aren't as good as they used to be. I know some counties still require you to make the bid in person on the courthouse steps, where others are online. The people who do this are also pretty tight liped. I would like to here some stories myself.

[texasair]

Just a few out of many caveats

At the usual foreclosure auction you may be bidding against a dozens or more seasoned investors as well as the company or person holding the mortgage.

A lot of property posted for foreclosure, that you may spend much time and effort researching for one reason or another may not be actually auctioned at the foreclosure sale.

If you buy a property at foreclosure, there is no guarantee that it will be vacant. You may have to go through eviction proceedings. Persons being evicted against their will can do a lot of damage to a property that probably already is not in the best of condition.

In a tax foreclosure for 2 years the former owner has the right to redeem or buy back the property under a specific set of conditions.

You will not get a title insurance policy. Checking on deed restrictions, environmental issues, utility easements, encroachments, insurance claim history, flood zone and flood history, tax liens, including IRS tax liens, termites, past building permit deficiencies, unresolved Red tag violations for electrical, plumbing,gas and septic and a host of other possible issues is all on you.

That being said with a lot of research and a little good luck there is money to be made.

Do your homework well and best of luck!

[Hudson05]

Thanks. When you say Flip, can that mean rent and/or sale? assume the process would be similar in either case.

Exactly. The difference in a flip rental and flip sale house is related to level of finishes and the type and duration of financing that's put in place. Any good hard money lender can walk you through it. There is also hard money out there for flip and hold/refinance scenarios. Everyone involved will want you to put together a documented rehab budget, and plan for either renting, selling, or refinancing.

[Hudson05]

Just a few out of many caveats

At the usual foreclosure auction you may be bidding against a dozens or more seasoned investors as well as the company or person holding the mortgage.

A lot of property posted for foreclosure, that you may spend much time and effort researching for one reason or another may not be actually auctioned at the foreclosure sale.

If you buy a property at foreclosure, there is no guarantee that it will be vacant. You may have to go through eviction proceedings. Persons being evicted against their will can do a lot of damage to a property that probably already is not in the best of condition.

In a tax foreclosure for 2 years the former owner has the right to redeem or buy back the property under a specific set of conditions.

You will not get a title insurance policy. Checking on deed restrictions, environmental issues, utility easements, encroachments, insurance claim history, flood zone and flood history, tax liens, including IRS tax liens, termites, past building permit deficiencies, unresolved Red tag violations for electrical, plumbing,gas and septic and a host of other possible issues is all on you.

That being said with a lot of research and a little good luck there is money to be made.

Do your homework well and best of luck!

I wholeheartedly agree with this. It's going to be so difficult to walk into a foreclosure auction as a newbie and not end up in some serious trouble. off market deals don't necessarily need to be foreclosures to make some money. Not nearly as much money will be made going through a wholesaler, but for the first time person the experience can be invaluable as long as you're not expecting to make tons of money on your first flip.

[Hudson05]

With the popularity of the house flipping shows, I bet the deals aren't as good as they used to be. I know some counties still require you to make the bid in person on the courthouse steps, where others are online. The people who do this are also pretty tight liped. I would like to here some stories myself.

The shows appeal to the people who want something for nothing. Flipping is risky and doesn't always make money. It can get people into a lot of trouble quickly.

[TeamAmerica]

Just a few out of many caveats

At the usual foreclosure auction you may be bidding against a dozens or more seasoned investors as well as the company or person holding the mortgage.

A lot of property posted for foreclosure, that you may spend much time and effort researching for one reason or another may not be actually auctioned at the foreclosure sale.

If you buy a property at foreclosure, there is no guarantee that it will be vacant. You may have to go through eviction proceedings. Persons being evicted against their will can do a lot of damage to a property that probably already is not in the best of condition.

In a tax foreclosure for 2 years the former owner has the right to redeem or buy back the property under a specific set of conditions.

You will not get a title insurance policy. Checking on deed restrictions, environmental issues, utility easements, encroachments, insurance claim history, flood zone and flood history, tax liens, including IRS tax liens, termites, past building permit deficiencies, unresolved Red tag violations for electrical, plumbing,gas and septic and a host of other possible issues is all on you.

That being said with a lot of research and a little good luck there is money to be made.

Do your homework well and best of luck!

Great info. Exactly why I am asking!

[texasair]

I forgot to answer your actual questions.

#1 Unless they have changed it recently it is cash or cashiers checks handed to the trustee as soon as he says the word sold. Most buyers get a stack of cashiers checks in 10k increments and carry enough cash to make up the difference.

#2 In my experience usually drive by only. If it is abandoned or open you could go in and poke around. Climbing in through an open window or pushing open a locked door is a good way to get shot.

#3 Not Always, it depends on the loan to value ratio. But usually you will be bidding against the mortgage holder up to a certain amount. It may be up to the actual mortgage balance or could be an amount much lower. Often the balance on the mortgage is very close to the value of and in some cases may exceed the value of the property.
I was always suspicious (but have no proof) that if it was a really good deal that the trustee had one
of his investor pals there to bid.

Also have your insurance company ready to put a binder on the property ASAP. As soon as you buy it, it is yours.
If someone gets injured on the property right after you buy it , its on you.

[Bueller]

Auctions are tough. Several bidders that overpay. Texasair is on point answering your other questions. Nothing against Hudson05, but I have never found a New Western deal that met my criteria. I have sold them a bunch though.

[Kingfisher789]

You want to buy stuff around DFW or any where?

[TeamAmerica]

Auctions are tough. Several bidders that overpay. Texasair is on point answering your other questions. Nothing against Hudson05, but I have never found a New Western deal that met my criteria. I have sold them a bunch though.

Can you clarify? Are their wholesale prices simply too high? Is it really first come first serve or is it buddy buddy heads up?

Their Google reviews are positive.

Their website says they have no fee which means likely their agent is already pricing in their profit for finding the deal.

As Hudson noted, sounds like the learning experience is as valuable as the cash profits.

[TeamAmerica]

You want to buy stuff around DFW or any where?

Yes dfw as that is the market I know best.