Sheriff Auction in Oregon

16 Replies

Anyone in Oregon that buys at sheriff auctions willing to send me their contact for a quick phone call or email. Have a few questions that pertain to upcoming deals. Thanks.

I have spent years at it.. not interested in off line talks if there is something that we can talk about on the open thread that will help others I am happy to relate my experiences.. I have bought about 500 to 600 of them in Oregon over the years.. so I guess that makes me qualified.. but have not done much in the last 5 years frankly.. the competition is SO KEEN that its just no fun like it used to be..

Originally posted by @Jay Hinrichs :

I have spent years at it.. not interested in off line talks if there is something that we can talk about on the open thread that will help others I am happy to relate my experiences.. I have bought about 500 to 600 of them in Oregon over the years.. so I guess that makes me qualified.. but have not done much in the last 5 years frankly.. the competition is SO KEEN that its just no fun like it used to be..

 Jay,  


I have learned that investors are reaching out to owners that are getting foreclosed and buying the rights of redemption.  Did a ton of work getting bids and getting all my ducks in a row on a house coming up for Sheriff auction only to find out last week that the rights of redemption were sold for $500 dollars to the owner and $4,500 or a total of $5,000 if they were to redeem those rights and gain the property.  In short.   It sounds like I need to figure out how to negotiate buying the rights to redemption for prospective properties I want to bid on.  Or perhaps offer the investor $6,000 for the rights?

1.  Any advice on how this is done?  Some general guidelines for what to pay for the rights on a particular house?  When it might be a waste of the 500 dollars?

2.  Is there any conceivable reason I should go ahead and bid on this house other than wanting experience bidding and having someone hold my cash from me for 90 days while I can't work on the house for fear of spending money I won't get back.  Maybe it's a conservative investment strategy for some.   I guess a 9% return on my money in 90 days is better than what I've been doing which is not landing any deals.  

3.  What other records and or due diligence is a must before buying a property at the Sheriff auction. 

4.  Also.  Is there a strategy to be able to use Hard Money at Cash Only auctions.  My lender tells me that it has to be my money to buy but then he will buy it off me.  

5. My goal is four flips and or BRRR's this year. Where else should I be investing my energy and time to find deals?

@Josh Reed

the bigger players in the states once things switch from predominantly Trustee to Sherriff they set up teams to buy redemption rights.. I looked at this but my reading of the law was just like trying to buy a preforeclosure in Oregon you needed to be a licensed foreclosure agents.. which is a Broker  Lawyer and RML0..  while I had the licesnes it was unclear.

WEll in Oregon everybody just did what they wanted to do regardless of the laws  Just like people that sell real estate they don't own do..

But anyway the bigger players are properly licensed and they basically wont bid on a Sherriff sale UNLESS they own the rights or they wait for others who are knew to the game don't understand the Redemption rights until after the fact and once they contact these guys that paid 500.00 for the rights they usually sell them for 5k to 20k or higher.

its not 90 days its 6 months.. just FYI.

There are Seattle based lenders that will provide capital at the steps.. Not sure if they work Bend or not.. but they pretty much decimated the PDX market.. REASON when I did it you actually needed cash... Now these guys have unleashed literally hundreds of investors who never did this before but have the 30 to 50k as down payment.. many make Zero money or lose I see it all the time the HML makes a killing they rarely lose.

Pretty tough gig these days in Oregon unless your there every single day and have a boat load of capital to work with minimum of a few million to be relevant.  

Originally posted by @Jay Hinrichs :

@Josh Reed

the bigger players in the states once things switch from predominantly Trustee to Sherriff they set up teams to buy redemption rights.. I looked at this but my reading of the law was just like trying to buy a preforeclosure in Oregon you needed to be a licensed foreclosure agents.. which is a Broker  Lawyer and RML0..  while I had the licesnes it was unclear.

WEll in Oregon everybody just did what they wanted to do regardless of the laws  Just like people that sell real estate they don't own do..

But anyway the bigger players are properly licensed and they basically wont bid on a Sherriff sale UNLESS they own the rights or they wait for others who are knew to the game don't understand the Redemption rights until after the fact and once they contact these guys that paid 500.00 for the rights they usually sell them for 5k to 20k or higher.

its not 90 days its 6 months.. just FYI.

There are Seattle based lenders that will provide capital at the steps.. Not sure if they work Bend or not.. but they pretty much decimated the PDX market.. REASON when I did it you actually needed cash... Now these guys have unleashed literally hundreds of investors who never did this before but have the 30 to 50k as down payment.. many make Zero money or lose I see it all the time the HML makes a killing they rarely lose.

Pretty tough gig these days in Oregon unless your there every single day and have a boat load of capital to work with minimum of a few million to be relevant.  

Jay, 
Thanks for the quick reply.  On a Sunday night I might add.  After I posted I went ahead and found the owners contact info and gave her a call.  Figured it never hurts to ask. 

Heres the deal.  She does not plan on redeeming the rights and did not even know she has them.  She wondered if she even could redeem the rights despite claiming bankruptcy?  I offered 3% of what I think the house might go for at auction and she agreed with 500 non refundable and the remainder due only if I become owner of house.  She gave me some great information about what had been done to the house and the history of repairs and such. 

I told her that sometimes guys even buy the rights after the auction is done and that I may think about doing this if I feel I can still pay her a commission and the auction bid price.  She was ok with this to. 

Questions

1.  What the hell do I do now?  The Auction is this Thursday.  

2.  How do I find out who owns the rights of redemption (her or fannie mae in this case)

3.  If I buy the "rights to redeem" from her doesn't that stop other companies from coming in after the auction and trying to buy them off her for more?  You mentioned this is what they often do and I was confused.

4.  MOST IMPORTANTLY.  If I buy the "rights to redeem" do I take on her previous debt?  What else do I need to do in order to protect myself on Thursday.   

@Josh Reed   your melding a lot of things together.. first are you a licensed foreclosure consultant ?  if not what your doing technically is not legal.. look up OR law on this.

that all said i doubt you go to jail or anything but just wanted you to be aware.  If your a licensed Broker RMLO or Attorney your good.. if your an attorney you should know this stuff  :)

do you even know how to buy rights do you understand what paper work you need.. its not just a written contract.. there is much more.

In the state of Oregon there has been few who redeemed.. I had a friend that did and it was dog tough for him as you basically have to find someone to give you cash.. and all junior debt gets reattached when homeowner redeems thats why they are so rare. 

the play is if you do own the rights is that There IS equity and someone who does not really know what they are doing until post sale tries to get title insurance or refi and they cant get title insurance until the rights have sunset.. If you own the rights you can waive your right of redemption there is a method to that and it clears title in about 45 days instead of 6 months.. thats the value proposition to the person who bought it at sale. AS they are all cash most are looking to refi with HML or what have you ASAP not have all their cash sitting dead for 6 months.. plus if you do any work on the house past winterizing it and keeping it water tight non of that money is reimbursable in a redemption..

so the value in redemption rights is not huge money its fun money though for my guys that do it.. they pay 500  bucks sit back wait for a call and sell them as i stated for 5 to 10k... Or if there is enough equity they bid them if they don't end up with them simply means someone paid too much for it.. and unless they buy the rights they have to sit on it for 6 months and hope the owners don't beat the living daylights out of it.

Like I said when things went Sherriff I exited .. good ole days no redemption NO HML ers lending money to the mass's which is creating newb buyers paying way to much to make any kind of profit on a fix and flip strategy. and since i am not buy and hold.. I went elsewhere more money lending to these folks :)

Not any of the above mentioned professions.  Can play them all on TV.  Guess I gotta find me a real estate lawyer tomorrow to help me with all this paperwork.  I wouldn’t even know where to begin.  To have my cash back in 45 days is worth something for sure.  Plus who the hell can wait 6 months to start doing work on a flip or buy and hold. How does anyone do Sheriffs without the rights.  Still struggling to understand the junior leans piece too.  Specially what I will be financially responsible for as buyer of “rights to redeem”.  Guess I better ask my new lawyer when I find him or her tomorrow.  Think they will do pro bono?  He he. 

Originally posted by @Jay Hinrichs :

@Josh Reed  your melding a lot of things together.. first are you a licensed foreclosure consultant ?  if not what your doing technically is not legal.. look up OR law on this.

that all said i doubt you go to jail or anything but just wanted you to be aware.  If your a licensed Broker RMLO or Attorney your good.. if your an attorney you should know this stuff  :)

do you even know how to buy rights do you understand what paper work you need.. its not just a written contract.. there is much more.

Jay,  

Do you know the guy I need to be talking to so I can get this done legally and correctly. Would it be a Lawyer or Forclosure agent?  I want this deal.  

Anyone else have any suggestions referrals.  Thanks BP.  

@Josh Reed   I guess I am not following you.. if you want it just buy it at the sale end of story..   you don't need a lawyer for that and if the redemption rights have not been purchase yet.. and the lady is in negotiation with you.. no one is going to buy them so you don't need to buy them until you see if you win the bid.. 

keep in mind bidding on ANYTHING with equity in Oregon there will be competitive bidding and you ( at least in the Valley maybe not over there but would be surprised if that's not the case ).. so you don't want to get all in on ONE property the chance of buying one property is quite remote generally speaking.

If you are the bidder that wins at auction then go to the lady and make your redemption rights deal.. since you already talked to her  Its pre foreclosure that you need the license.. ( Like I said though I would not worry much about it 90% of the population knows nothing about it either  LOL  Just like most folks don't realize in Oregon you need a developers license to buy and rehab homes to sell to the general public even if you hire a GC  that one cost me 5k fine to learn that one LOL

But anyway if you win the bid then go to a title company this will be free and ask them to prep whatever docs they need the owner ( previous) to sign so they can get you title insurance before waiting the 6 months.. or do nothing wait the 6 months. you can evict during the redemption period and rent out if the lady won't leave on her own. 

be prepared to over bid incase someone is as keen on it as you are.. 

Originally posted by @Jay Hinrichs :

@Josh Reed  I guess I am not following you.. if you want it just buy it at the sale end of story..   you don't need a lawyer for that and if the redemption rights have not been purchase yet.. and the lady is in negotiation with you.. no one is going to buy them so you don't need to buy them until you see if you win the bid.. 

keep in mind bidding on ANYTHING with equity in Oregon there will be competitive bidding and you ( at least in the Valley maybe not over there but would be surprised if that's not the case ).. so you don't want to get all in on ONE property the chance of buying one property is quite remote generally speaking.

If you are the bidder that wins at auction then go to the lady and make your redemption rights deal.. since you already talked to her  Its pre foreclosure that you need the license.. ( Like I said though I would not worry much about it 90% of the population knows nothing about it either  LOL  Just like most folks don't realize in Oregon you need a developers license to buy and rehab homes to sell to the general public even if you hire a GC  that one cost me 5k fine to learn that one LOL

But anyway if you win the bid then go to a title company this will be free and ask them to prep whatever docs they need the owner ( previous) to sign so they can get you title insurance before waiting the 6 months.. or do nothing wait the 6 months. you can evict during the redemption period and rent out if the lady won't leave on her own. 

be prepared to over bid incase someone is as keen on it as you are.. 

Jay,

Here was my point.  As there will most likely be many other interested buyers and I have the initial negotiation with the lady (which I take to mean absolutely nothing).  Why should I not buy the "rights to redeem" this week before the auction?  If I say offer her 500 dollars and 2500 if I redeem.  As you said most don't redeem as there is no equity in the deal at that point.  But If I do bid and win I don't have to wait 6 months.  If I don't win.  I can sell my rights to redeem to for more than I paid  as you noted some of your buddies do.  If I wait till after the auction then I have zero negotiation with the owner (previous) other than "well I did talk to this nice gentleman earlier that said he would offer me this.  Please let me know if I need some straightening out.    

Updated 24 days ago

IN negotiation I mean that If I am outbid that person is likely going to try and contact the owner to buy the rights to redeem to close sooner. Unless...the banks and other bidders usually just by property at auction and sit and wait the 6 months. Then I potentially wasted 500 dollars.

Am I following this right?

- In OR, the owner can redeem the property for up to ~6 months AFTER the sheriff sale.
- Enterprising Fellows go to the homeowner being foreclosed upon and buy their right to redeem for $500>
- Investor goes to Sheriff Sale and wins the sale
- Enterprising Fellows wait for Investor to call homeowner re: right of redemption because they can get started working in 45 days instead of 180.  Homeowner says "I sold those rights to Enterprising Fellows."

- Enterprising Fellows sell the redemption rights to Investor for $5,000 so that he can get started sooner

Sound right?

OK I get it... sure you can buy the rights  whats 500 bucks in the grand scheme of things you will either lose it and the deal .. or you will bid and win the deal and have your rights. Or you could hold them hostage to sell to someone who beat you out of the deal.. .  so yes your thought process is correct.. Carry on  and best of luck with it.. please report back as to what happened If I learned anything over the years these sales are always full of twists and turns..

Just ask the title company in your town what you need to secure redemption rights.. this will be free and you get the doc they want.. most attorneys are really not up to speed on this stuff since its such a small slice of the law.. Unless you have one that has been representing courthouse buyers and knows it off the top of their head..  just trying to save you legal fees.. at the end of the day its the title company who is going to issue a policy to your lender or new buyer that you have to appease..

Although my gut says if she is not being pursued by others for her rights that the property has limited equity so you may just get it.. usually anything with any equity at this point there would be many suitors for her redemption rights..

although if its coming out of a relief of stay it could be falling through the crack.. and good on you if your on it !!!!

Originally posted by @Sean Cole :

Am I following this right?

- In OR, the owner can redeem the property for up to ~6 months AFTER the sheriff sale.
- Enterprising Fellows go to the homeowner being foreclosed upon and buy their right to redeem for $500>
- Investor goes to Sheriff Sale and wins the sale
- Enterprising Fellows wait for Investor to call homeowner re: right of redemption because they can get started working in 45 days instead of 180.  Homeowner says "I sold those rights to Enterprising Fellows."

- Enterprising Fellows sell the redemption rights to Investor for $5,000 so that he can get started sooner

Sound right?

Sean exactly right and I believe can be done in many markets not only Oregon.  but check your state laws.

my buddies who do this big time have one or two in office full time employees that do nothing but chase rights buy them.. knowing that most will be a loss but I guess income averaging they make enough to make it worth while.. most newbs don't understand it and with our starting bids pretty much 150 to 500k  that's a lot of dough to tie up for 180 days when 5 or 10k you start right away and most importantly can refi and get your cash back.

will be interesting to see how this one shakes out.. my only fear is if no one else is going for the rights means no one else is interested in bidding and that the equity is not really there for a flip .. but for a buy and hold person who can ALWAYS pay more than a flipper or it could be his house next door or some other intrinsic value we have no way of knowing.. or as you know we can never compete with someone who wants to owner occ.

Originally posted by @Jay Hinrichs :

Although my gut says if she is not being pursued by others for her rights that the property has limited equity so you may just get it.. usually anything with any equity at this point there would be many suitors for her redemption rights..

although if its coming out of a relief of stay it could be falling through the crack.. and good on you if your on it !!!!

 Jay,

Ok now you got me thinking I'm missing something big I am learning as I go here and trying to do so quick but not get caught with my pants down. This is my first ever Sheriff auction and the beginning of this entire post was asking for someone that can walk me though this.  Looks like your my Huckleberry (Sorry).   It says "SALE WILL BE SUBJECT TO ANY AND ALL PRIOR LEINS."   I thought that when it goes to sherriff auction that all prior leins are wiped clean and that only if one Redeems the rights that they become active again.  Is this correct?  If not what is the sure way to find out what kind of Leins it has (Title Encumbrence report was quoted to be $100). 

The banks are in way for way more than its likely to go for at auction so can I assume that the bank will buy it back at this auction and no one is even wasting their time with this particular property because  of this.  I contacted local title company and they wanted to refer me to lawyer to draft an agreement to buy the "rights of redemption" and then told me that it would only hold the valid rights if I in fact redeemed.  I was told next that Escrow can draft a document between two parties but that I should still seek legal counsel so that is worded appropriately. 

How can I find out what I am missing without paying 100's of dollars and wasting more time.  What do I need to do next.   


Sincerely,

Way Over My Head Rookie Investor

Well the days of drop bids are long gone.. and if there is any kind of insurance on the loan it will be a full credit bid.

do you have an opening bid ? that's where it will start.

foreclosures as one offs are pretty dicey as your finding out.. just keep following it.. I would not get wound up in the rights at this point.. since the guys I know draft their own redemption right docs that the title companies will insure over your going to pay thousands to get it done... remember these guys do this for a living.

and of course we are just shooting in the dark since you have not said what you think is owed on it.

are we talking a 500k mortgage or a 50k mortgage.

do you know if its first position ?

you should learn how to go to court house and do this for yourself.. trying to get all this info on the internet is not wise. other than the little bit I am telling you.. but its not legal advice and its just my experiences.

remember the guys your competing against in Oregon can just pick up the phone and the title company will give them date downs then and now.. this is why we did so well we had all the perks that a newb or a one of buyer just did not have.

it was funny at times my competition shows up with the newspaper clippings copies of everything they got at the court house to try to figure if they should bid...

I had a spread sheet with every single NOD in the 2 million metro that my secretary updated everyday.. had lien position tax's IRS lien everything we needed to bid all at a glance.. the title company actually update our data every Friday as the new NODs came out.. but we gave them 100 orders a year or more.

so you know the old deal these companies take care of who is bringing them revenue and in Oregon our title companies are very nice.. in many other markets you would not get the time of day being a one off.

You also probably have no clue about other special tax's that could attach that are not public record.. I learned that one and it cost me 90K large  LOL... so be careful. probably not an issue but it does happen..

only way to absolutely know if you can't do your own search's and know how to do the other special tax potentials is to pay for a OE  or full title report  OE wont even show the special tax's  that is only available through the  telephone and you have to know where to call and or a full blown title report. And each county is different  LOL.  I will guess this is like 97% of all sales in Oregon these days it will revert to lender and not go 3p

3P =  third party bidder

So far my consensus is "these guys can have it."  There's got to be a better way to financial independence.  Think I'll go back to building an actual  business that I can step away from in 4 years.  The stress of these shady deals alone isn't worth the payout.  Had a very successful developer once tell me "don't ever invest in anything with a bed in it."  Think I might listen to him.     

Updated 24 days ago

Ok so done with venting. But I do believe the better strategy for an investor just getting started out in Real Estate is to focus on off market deals and drive for dollars rather than fight for them at the courthouse. I'll go check the auction out and see what happens. I'll post what I learn.

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