Have you bought houses at the court steps...?? - Posted by Lazaro - NC

Posted by Jimmy on April 26, 2007 at 12:31:39:

I’ve attended and bid at a number of auctions. IRS auctions and county tax sale auctions. always seem to get outbid when I am going after houses.

I have acquired a number of undeveloped lots at tax sale auctions. not as many people are interested in these things, which is always an advantage for the buyer.

a few observations:

  1. the nicer the place, the less likely it is you will get a bargain. but that rule breaks down when you get into super-expensive stuff. there’s a 10,000sf mansion in Tulsa right now available in an IRS auction. not many folks can swing it. this could be a steal.

  2. do your homework. pull a preliminary title report and get a handle on the existing liens. inspect. know what you are getting into. calculate your top price and DO NOT go over it. I’ve seen auction fever before, and in ain’t pretty. I’ve seen bidding on properties where the bidders clearly were unaware of some big liens.

  3. the better-attended the auction, the less likely you are to get a bargain.

  4. properties in need of major work can be great opportunities (in auctions and any other situation). I did get a HUD property this way. not really an auction, but a ratcheted bidding process. it was a 4-plex (which will attract a lot less bidders than an SFR) in terrible condition (which scared everyone else away). after 4 rounds of price ratchets, HUD was willing to accept any offer. and I was pleased to make them an offer at that point.

  5. would-be owner occupants will usually bid more for a house than wil an investor. but that’s true in most situations, auction or otherwise

  6. I was not in the biz in the 80’s when the bottom fell out of Houston, Dallas, Ok City, Denver, etc. If those conditions re-appear, it could be fun (well, for a few people, anyway).

Have you bought houses at the court steps…?? - Posted by Lazaro - NC

Posted by Lazaro - NC on April 26, 2007 at 09:35:28:

This is my first time buying at the court house. Is there any words of wisdom, lessons learned, or horror stories that you can share?

After three years of doing fixer uppers, I finally got a working line of credit large enough to do cash deals. I have a realtor that finds excellent REOs deals from for me, but I would like to try buying at the court house on Foreclosure sales.

There is a hand full of homes coming out for sale. I looked for mechanical and tax leans, and judgments against the owners. Things are clear and I am waiting for the sale date to make my bid. If I get the house, I?ll take the paperwork to my attorney to do the closing.

For those of you season investors that have experience on buying at the court steps, can you share some do?s, and don?ts. I would appreciate any word of advice.

Lazaro - NC

Not many investors buying at the court house… - Posted by Lazaro - NC

Posted by Lazaro - NC on April 30, 2007 at 07:33:20:

I see a number of people talking about foreclosures, other people talk about pre-foreclosures, but it seems that not very many investors actually go to the court house and buy at the auction sale. Most of the properties I have purchased have been REO, or homes foreclosed by the banks, and then sale through realtors. That is not is not the same thing as paying cash, signing off the deed over to you and take possession of the property.

Lazaro - NC

Re: bought houses at the court steps…?? - Posted by dealmaker

Posted by dealmaker on April 26, 2007 at 22:37:18:

Yes, it does work.

I’m in TX and it’s a Trust Deed state, and I’ve been successful a few times, a couple of which were back in the crash in the '80s.

First off there’s not a lot of appreciation in TX so unless someone put a fair amount down there might not be a lot of equity, most “average” houses sold on a conforming loan so VA, FHA, or PMI were making the bank whole.

Know in advance what the indebtedness is, and how much “fluff” the bank (lawyer) padded it by. For example, the original Note was $80K, 5 years old so maybe paid down to $78, they’re asking $84K. You know there’s $6K of fluff.

Take enough cashier’s checks, in decreasing increments. In the above example maybe you take the following:


Offer them $30K, then $40K, then $45K, then $50K, then $51K, etc. You get the idea.

BTW, in the above example, we got it for $58K, put $4K into the cracked slab, $2K into termite repair/treatment, and $7K into cosmetics. Sold it in 5 months for $145K.


Yes with bribery - Posted by Annon Y. Mous

Posted by Annon Y. Mous on April 26, 2007 at 15:20:32:

I’ll put this annonymous since I guess what we did might have amounted to bid rigging. I don’t know if there were laws against it at the time or even now in our state.

We had to save a client’s home. We were going to buy the property and sell back to him. There were tons of liens and judgements on top of the foreclosing loan. One other person was at the sale. We didn’t know him, but he had a clipboard. We asked him if he was going to bid and how much. He reponded. We asked him how much it might take for him to go have a really nice early lunch. He could have gone to a nice restaurant with the money we gave him. Leaving us the only and successful bidder. He might have just been paid well for walking around with a clipboard. Could be an interesting career. At a dinner party someone could ask him what he does and he could respond “people pay me to get lost”.

We had one other interesting bid process through a bankruptcy trustee. What was supposed to be a done deal on a sealed bid ended up being played back and forth between myself and another. The trustee was jacking us around, so the other bidder and I joined. His company agreed to drop their bid and we then both used the asset.