Posted by bcc on July 23, 2000 at 22:59:42:
Stacy, once you identified the property and the seller wants to sell what do you do next?
Are Auctions the Only Way to Get Foreclosures at Less Than FMV? - Posted by Frank
Posted by Frank on July 23, 2000 at 17:53:51:
Just wondering…I live in a high price area and am considering pursuing the auction side of foreclosures. Since REO’s are typically sold for market value I was thinking my best chance of getting SFH for less than FMV would be at the auction house. Any thoughts on this? Any advice for someone that is new to the auction process?
Re: Are Auctions the Only Way to Get Foreclosures at Less Than FMV? - Posted by dewCo
Posted by dewCo on July 24, 2000 at 22:30:46:
You need to know your state’s laws. If there is a redemption period (in CO it’s 75 days) if could be a long time carrying with no ability to create cash flow, and then if you get the property you still have to evict the occupants, so maybe another 4-8 weeks! If you don’t get the property, is the money you’ll get paid worth the wait while the owner redeemed?
Auctions are a lousy source (for me) - Posted by Ron (MD)
Posted by Ron (MD) on July 23, 2000 at 20:28:00:
I’ve been to many auctions and never bought one. I am always surprised at the price they get. An auction I went to a few weeks ago was typical: about a dozen investor types there, I would have paid a max of $28k, it went for $38.5k. Buyer was a contractor/investor. My impression is that the successful buyers are often contractors. Auctions are easy to find (ads in the Sunday paper) for these guys – they don’t have to be too creative to find them. They bid high (I think) because they are essentially buying a job for a few months, plus a small profit on sale.
I have bought a few properties at the mega-auctions conducted by the national auction houses in the downtown hotel ballroom. These REO’s have typically been multiple listed and the selling banks want to unload a bunch of them. They tend to sell for 60-70% of the MLS price. Even at that, they are usually too pricey for me – if I go with an interest in 5-6 particular properties, I’m happy if I get one. The ones I do get are usually acceptable deals, but not great deals. My best deals usually come from FSBOs that haven’t multiple listed.
I do buy one or two houses a month from MLS (usually REOs). To do this, I watch the new listings and price changes every single day and move quickly if something looks good.
Bottom line, it seems like auctions should be cheap, but they aren’t (at least where I am).
Ron
Re: Are Auctions the Only Way to Get Foreclosures at Less Than FMV? - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 23, 2000 at 19:32:48:
Foreclosure auctions are one way, yes. Another way to get houses below FMV is to buy them before they go to sale (preforeclosures). I happen to like preforeclosures because I have found that there is less competition, expecially if you find them before the lender has taken any action. As soon as the foreclosure action has made it into the public record, your competition starts to grown exponentially.
Stacy
Re: Are Auctions the Only Way to Get Foreclosures at Less Than FMV? - Posted by CW
Posted by CW on July 23, 2000 at 19:50:25:
stacy,
how do you find out about preforeclosures before they hit the county newspaper? thanks
Re: Are Auctions the Only Way to Get Foreclosures at Less Than FMV? - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 24, 2000 at 01:40:38:
There are as many answers as there are deals. It depends on the seller’s needs, and the situation with the property.
I always think “subject to” from the start. Does it make financial sense to bring the mortgage current and take over the payments? Will the owner accept this to save his credit? If not, how much money would he take to be done with his problem? $500? $1000? Is there a second mortgage, or any other liens to deal with? If the second is also behind, will they discount? Is there enough time to just take the deed, and quickly find a tenant/buyer with enough down to cover the arrears before the lender starts the foreclosure action? If the lender has already started the foreclosure, what amount has been added for legal fees? Would a quick Land Contract sale bring in enough to cover the arrears? How much repair is needed? Can I pass the cost of repair on to the buyer? Would a buyer want the house as-is? If subject to is out, could I get a good loan and just buy the house?
I could go on, but do you get my point?
Stacy
Re: Are Auctions the Only Way to Get Foreclosures at Less Than FMV? - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 23, 2000 at 22:44:55:
Hello CW-
Preforeclosures can be found through the normal marketing strategies we know and love. An ad in the paper is an example.
We Buy Houses
Payments behind? No problem!
Any condition…etc, etc.
Postcards to out of state owners sometimes uncover a preforeclosure (landlord in trouble). Passing out biz cards, using flyers, letters, TV commercials (just kidding). The usual marketing methods uncover those people who are behind in payments. There’s no way I know of to target ONLY those properties that have payments behind, but have not yet been “advertised” in the public records, because no one can tell if an owner is behind until the lender takes action. The only exception, I guess, is an ad targeted to those people. I’ve done this before with some luck, and I’ll probably do it again.
Stacy
Re: This was meant to answer the question from bcc. nt - Posted by Stacy (AZ)
Posted by Stacy (AZ) on July 24, 2000 at 01:42:03:
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