Foreclosure Auction : Narrowing Down Your List

[Kyle H]

Hello All, I am bidding on properties in Florida almost every day and looking for some insights to save some time. For those that are experienced you know that this is A LOT OF WORK! We get O&Es, drive the properties, look at comps and set a max bid prior to auction. So many of these properties are bid up over market value by the lender and/or cancelled the day of auction. Some auctions show the Plaintiffs max bid and others are hidden. If hidden we obviously do the due dilligence and bid.

ANY TIPS TO KNOWING THE LENDER IS GOING TO BUY THIS BACK REGARDLESS?
Tips on saving time in this process?

Thanks, Kyle

[Brian Burke]

Originally posted by @Account Closed:

@Brian Burke

What does your "database software" do?
@Brian Burke

It allows me to aggregate data on what is going to auction and couple that data with notes from our drive by, property stats, delinquent property taxes, info from bankruptcy court, the title search, our valuation, maintains the sale calendar, and practically eliminates human error.  Well, that's about half of what it does (the half that I'd disclose, the other half is competitive advantage!).  I had one guy offer me $50K for it sight unseen, but I'll never sell it.  :)  it was also a key reason why I had a private equity firm offer to invest around $200 million with me to buy properties at the auction (which I also turned down but that's another story).

I wrote it out of necessity because "back in my day" (crap, I'm starting to sound like Jay, LOL) there was no way to track these sales...everyone else was constantly shuffling through multiple file folders and legal pads trying to find info on what they were bidding on while I had one sheet of paper folded up in my pocket that told me everything I needed to know for everything going that day.  I got a lot of jealous looks from the file-shufflers.  But not anymore. Now everybody is on the property radar app on their phone.  Everybody but my bidders, they are on our own app connected to my own system.  Old habits are hard to break, I like my system better, and if you want to beat the opposing team you can't play from the same playbook.

[Chad U.]

@Account Closed

It is relatively easy nowadays to build your own little system for tracking auction properties, pulling foreclosure data from all the different sites like Zillow, Redfin, along with public county records.  With the power of Excel and/or Google Sheets, if you have a little programming knowledge there's the ability to extract and compile everything Property Radar gives you for free.  If not technically inclined, is pretty inexpensive to go onto Freelancer, Elance or Fiver and hire someone for a couple hundred bucks to do it for you.  

[Jay Hinrichs]

@Chad U.  Poperty Radar for 50 a month is a no brainer... its got all sorts of cool apps that go beyond foreclosure.. like you can be driving along with a map of the street your on.. and the lots will be color coded owner occ or non owner...

[Chad Jarrah]

Hey guys, I feel like I'm coming late to the party here, but figured this thread seemed a relevant place to ask. I had a quick question and it seems you all are knowledgeable about sheriff's sales. 

Up until now, all of the sheriff's sales I've been to have had the attorney/firm name on the sale list. I'd call the firm and ask for the upset price a day or two before the sale. Half the time they give it, they other half they refuse (is this typical for everyone else?) Recently I attended a sheriff's sale in a different county - on the sale list the only info given was the plaintiff/defendant (i.e. Wells Fargo vs. John Doe), the property address and the judgement amount. How can I find the upset price with this limited info?

Look forward to any wisdom. Thanks in advance!

[Chad U.]

@Chad Jarrah

I"m not sure about your counties, but in Florida for most counties the attorney's banks seldom post their max bid or upset. And if they do, it's generally what's called here, the Final Judgment amount which is the outstanding loan balance, interest, legal fees, etc.  If you can find out this amount, this will often be their upset bid. 

[Chad Jarrah]

Thanks @Chad U....yeah, I'm not sure. From what I've seen the judgement amount and the upset price or opening bid can be close, or way off. It just depends on what the bank is willing to part with the property for. 

[Chad U.]

@Jay Hinrichs

Unfortunately PropertyRadar only covers the west coast states CA, AZ, NV, OR, & WA.  I agree it is a really cool tool and would subscribe in a heartbeat if it covered FL and some other eastern states.  There's nothing else like it here, so most are forced to build their own tools, archaic as they may seem compared to PR.  

[Account Closed]

@Brian Burke

That's is a great response. I am curious on how the data is available to you, unless you are talking about an REO. You mentioned title search in your response. It would seem you are pulling in a prepared title search and then analyzing it for completeness and encumbrances. That being said, when you mention shuffling though files, it sounds like the arduous task of looking through judgments and the like. Can you clarify.

Independent of the answer, I think its awesome to have a customizable / automated data acquisition system.  WOW.  It is defiantly a testament how far the court records  have come in your area. 

Being that I wrote software for a good 18 years, I could really use your source code for said program.  Feel free to email it to me ASAP:)

[Account Closed]

@Chad Jarrah

I don't think you will find anything different from  what you are doing.  It is a hit or miss on what information you can get with regards to the upset price and just need to find which firms are willing to disclose that info prior to the sale.  This is what I have been told, and am seeing myself.

[Account Closed]

I have another post going on right now, but it did not get much attention, so as the OP I will attempt a redirect.  Does anyone have any war stories about getting burned by a foreclosure purchase.  This is with regards to title/encumbrances.

Thanks.

[Steve Babiak]

Originally posted by @Account Closed:

I have another post going on right now, but it did not get much attention, so as the OP I will attempt a redirect.  Does anyone have any war stories about getting burned by a foreclosure purchase.  This is with regards to title/encumbrances.

Thanks.

Here you go. This is one of the topics from the sheriff sale FAQ that I assembled:

https://www.biggerpockets.com/forums/41/topics/777...

[Account Closed]

@Steve Babiak

Thanks Steve.  Here I thought I had exhausted all those.   

[Brian Burke]

Originally posted by @Account Closed:

@Brian Burke

That's is a great response. I am curious on how the data is available to you, unless you are talking about an REO. You mentioned title search in your response. It would seem you are pulling in a prepared title search and then analyzing it for completeness and encumbrances. That being said, when you mention shuffling though files, it sounds like the arduous task of looking through judgments and the like. Can you clarify.

Independent of the answer, I think its awesome to have a customizable / automated data acquisition system.  WOW.  It is defiantly a testament how far the court records  have come in your area. 

Being that I wrote software for a good 18 years, I could really use your source code for said program.  Feel free to email it to me ASAP:)

In CA, notices of trustee's sale are public record.  There are data services that mine the vital info out of the notices and deliver the raw data, which we then integrate into our structure.  The rest is all manual.  Title searches are by hand, looking at county records and inputting the notes.

"Shuffling through files" is my description of what bidders would do at the auction...ten houses are going and they used to have to sift through all of their stuff to figure out what they needed to know about the property, where they valued it, what the condition is, what the title is like...that's about all I can say about that because I've never done it that way, I always had a better system.  LOL

[Steve Babiak]

Originally posted by @Account Closed

I don't understand.  Why or even how can a bank bid beyond the judgment amount against the defendant.   It is my understanding banks are trying to reduce their REOs.

Robert,

What I write below will apply when the lender is trying to get "made whole" to the maximum dollar amount; when that is the case, the lender's bid can easily exceed the published debt / judgment. Since you are in PA (like me), some of these things might be specific to PA and / or judicial foreclosure states; and some of these you and I already covered in PM. 

Reasons that bid exceeds published judgment (amounts for these listed items get included in the lender's bid):

• Sheriff's cost 
• Sheriff's poundage (a sort of commission to be paid to the sheriff based on dollar amount of highest bid)
• Transfer taxes
• Property taxes
• Municipal service liens (utilities and rental licenses for example) or delinquent amounts
• Code enforcement citations
• Re-assessment of judgment (additional payments and interest from actual date of published judgment amount)
• Property preservation costs (winterizing, lawn care, board up, re-keying, etc. for a vacated property)
• Additional legal fees

That is not an exhaustive list - but once you start thinking of what gets included into the lender's bid, it becomes easy to see why the lender's auction bid can exceed the published debt / judgment amount. 

In light of that, I don't understand why others earlier in this thread said the lender's bid was not allowed to exceed the judgment / debt. 

[Jay Hinrichs]

@Steve Babiak  out our way and up until a few years ago all of our sales were trustee sales you had a few sherrifs sales but they were rare.

So a trustee sale there is No judgement.. their is just an opening bid.. determined by the lender.

Utilities are wiped out.. HOA in most instances are wiped out. there are no transfer taxs and ad valorum tax's you simply take title sub too.. unless the bank has been paying them then they are included in the opening bid. Code enforcement may or may not stick.

Foreclosure cost to the trustee are included along with winterization etc.. however this is nota judgement just allowed monies to be added to minimum bid IF the lender chooses.

[Sean OToole]

I spent significant time and money trying to find patterns to bank behavior that would allow us to predict the likelihood that a particular property would go to sale for our customers. You'd think that given the banks focus on process you'd be able to find patterns that would give you the ability to predict both the likelihood the property would actually sell on a given sale date, and the amount of the opening bid. Despite the efforts of our best data scientists, using the latest tools in predictive analytics (using predictive modeling, data mining, machine learning), we never got it to the point where I felt we should offer it as a product.

Outside of that, the only thing that really works is to research every property that meets your requirements and show up for every sale. When sales got really slow back in 2005 I had to research as many as 100 properties for everyone 1 I purchased at trustee sale. The only way to make that work, is to be VERY efficient. The best trustee sale investors I know are very process oriented and efficient. Radically different business then other forms of investing where relationship skills matter as much or sometimes more then process. As a result I tend to only recommend trustee sale investing to process vs people oriented investors.