Im a total newbie going to a foreclosure auction in Dallas and Collin county in Texas next month with my business partner. We are going to evaluate and research what happens at foreclosure auctions and learn how many people are playing in this field in our market. We have purchased a list and are scrubbing and evaluating what we would offer on the homes to compare to what they are auctioned for.
My question, any advice or things you would share with someone who is preparing to go to their first foreclosure auction? Thank you for all advice and wisdom sharing
its highly market dependent.. some markets like most of the west coast its a HUGE money game if you cant show up with more than a million in cash.. your pretty much wasting your time..
in other markets there are still deals at 5 to 50k all day long .. so those you have a good chance of buying something.
its a good ole boys system. you will see the regulars that are there and dominate.. like in Vegas there are two hedge funds that buy probably 80% of the deals.
You cannot focus on a single property as many times that property will not go to sale.. now some areas are different and more consistent.. IE once they are published 90% chance they will go.. but then you have the bank bidding them up to a full credit bid which can be more than the value of the asset so you do all this work and the property you wanted for 50k gets bid to 75k and you cant figure out why ? well PMI is why.
So bottom line depends on the market and the opening bids.. and the process.. its still viable in a few markets I fund folks that buy court house steps stuff monthly.. WEst coast though its a fraction of what we used to do..
I'm in your area. Been to a few of these. Super competitive, deals are as thin as on the MLS and, in my opinion, way riskier. Prices I saw properties going for had me scratching my head. There's probably a deal or two out there to be had, but there are easier ways of finding them. Just my two cents.
@John Chapman thanks for the reply. I really appreciate that feedback especially from someone in the area.
@Jay Hinrichs thanks for your feedback and info
@Adrian Hewitt I was looking into auctions too. How was your experience earlier this month?
Hey Melissa. The experience was really good and I learned a ton. I purchased a foreclosue list beforehand to help save some time analyzing and putting information into excel.
It was very interesting to see how the process went. What I learned was this:
-about 8 to 10% of the homes on the foreclosure list actually get auctioned off at the auction. We had analyzed many homes that we were interested in and only one of the homes we were interested in was actually auctioned.
-the foreclosure auction we went to was very competitive with many people bidding and prices going for a little higher than we would have paid.
-there were still deals to be had and many people bidding
-talking to one of the auctioneers afterwards we learned that the foreclosure market is slower now that it has been in the past and more cutthroat. He said many bidders in the past are no longer attending auctions and that the majority of the homes are purchased by the same investors each month. That was just his opinion and comments
-I also learned I need to find a way to do lien searches and understand that better.
Hope that helps. Maybe I will see you at one of the next auctions.