I came across a property in an area that I have been monitoring for about 2 years now. Decent initial price, however, as the title above denotes, it is a BANKRUPTCY AUCTION!
I have never dealt with a bankruptcy auction before, and to date, I have one, 3 unit investment property.
Here's what I know...
1. Viewing of the property is permitted on TWO SPECIFIC DAYS ONLY. I have scheduled a General Contractor to walk the property on one of days. On those days, water and electric will not be on. Both the access to the property AND the lack of electric and water may present an issue if conventional financing was an option, specifically, appraisal and inspection.
2. Sale of the property is not contingent on financing. Therefore, if my bid is accepted, I have 45 days to come up with the money.
Since this is my first experience with something like this...
A. What questions should I be asking?
B. Since this property is advertised as at a certain purchase price, during the auction, can a bid come in LOWER? Or will the auction start off at the purchase price and no lower?
C. Do I risk acquriring the property with an acceptable bid, THEN going through the conventional loan process once I have access to the property? Lending more time for an inspection and appraisal?
D. Do I go with Hard Money, and Buy, Rehab, Rent and Refinance?
THANK YOU FOR YOUR HELP BP!!!!
I am going through this right now for the first time too.
All the above is also applicable to the auction i'll be attending only mine is a 'Probate Auction'. Mine is tomorrow so I can report back and let you know what actually happened. When is your auction?
My experience thus far:
1. Contractor walked property with me on one of the two viewing days. He has since provided an estimate so I can include that in my bidding max
2. I will let you know if the bidding starts lower than the stated amount. I expect a lot of people to attend the one I will be going to
3. I contacted a lender to go over the property, etc to be ready in the event I win.
All the rest depends on your strategy, brrr, flip, buy and hold, etc.
Have you tried contacting the owner of the property? If you can contact the owner this will help eliminate competition at the auction and you will get a great deal. There are hard money lenders who will finance 100% of the deal, I recommend take one hour of your day and call as many hard money lenders to get their criteria to loan 100% of the money. I hope this helps and let me know if you need anything. Go crush it!!
@Travelle Mason buying property at auctions without financing secured in advance is a very high risk strategy. Getting financing that fast especially with limited access it going to be tough. you are at risk of loosing your deposit.
Thank you ALL for your input!
New UPDATE: The auctioneer/seller WILL NOT allow access to the property (out side of the two viewing days) until the property is closed on! ADDITIONALLY, the water and electric WILL NOT be on during the two viewing days. This pretty much eliminates conventional loans!
@Rene Doyle , the auction is not until 12/05, so I have a little bit of leeway. I can't wait to hear how your auction went!
@Amit Darji , I haven't had any luck with find a HML that will finance 100%. If you know of any, please let me know!
Despite getting TWO Hard Money Lenders to commit to this acquisition AND both providing reassurance that getting a appraiser to view the property on the TWO dates the property was available for viewing...
Neither of them were able to deliver an appraiser! This is required for them to secure the loan.The auction is today. I am all out of options.
In the defense of HML #2 it was not "their fault". An appraiser did accept the appointment time/date, however, some how they did not show up for their appointment.