Hard Money Lenders for Auction.com???

Question

Good morning BP family,

I am new to real estate investing and I am eager to dive in.  I've been binging webinars, youtube vids, podcasts and these forums and attending networking events in my area to educate myself and meet like minded people that I can learn from, possibly shadow and evenutally/possibly work on a deal with.  I came across a post from a few years ago regarding hard money lenders and auctions however;  I felt the need to post the question again just in case there have been any changes.  Has anyone had any luck obtaining a property via auction (particularly auction.com) using a hard money lender?  If so please post your experience and who the lender is, or if you know any hard money lenders that fund properties via auction please post.

Thank you all in advance for your responses.

Cordially

Lateeka  :-)

Account Closed · Answer

@Lateeka Mosley I work with a hard money lender and we have clients who buy from auction.com.

Bob Floss II · Answer

@Lateeka Mosley It is possible, but there are several factors involved that can potentially kill the deal. First, you need to build up a solid relationship with a hard money lender ahead of time so you can hit the ground running.  The people I work with know me personally and it helps if you meet them face to face or have previously done a deal with them in some capacity so they feel comfortable with you. I would not wait until you have a property under contract to figure out if they want to work with you.

Second, unless the property explicitly states that auction is allowing for the property to be financed, they will not help you in regards to getting your hard money loan done. If you cannot get access to the property for an appraisal, you won't be able to get the underwriting completed. Most of the properties on auction require you to take the property subject to occupants, who are not to be disturbed, meaning you cannot get in the property even when you have it under contract. The contract doesn't allow for a financing contingency so now you've potentially lost your earnest money. I've encountered situations where the homeowner abandoned the property and the front door was left unlocked so an appraiser was able to run over and get it done. That's why I always recommend driving by and scoping out any property you are bidding on. However, even getting this done takes a lot of maneuvering and there's a risk the seller will send a third party to secure the property when they realize its vacant and they still wont allow you access. The point is, this strategy involves taking a lot of risk that is probably better reserved after you've done a few deals.