​Foreclosure Auctions in Collin County Texas

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​Foreclosure Auctions in Collin County Texas

Mark S.
Plano, TX · Member since 2014 · 197 posts · 33 votes

So a couple of my friends are thinking of purchasing properties at foreclosure auctions and it sparked my interest. The idea of purchasing a home at an auction was really appealing but I am not sure of how well it pays off. My previous investment properties were all bought through a realtor with 25% down, the more conventional way. I am hoping to figure out the most profitable way to purchase the houses. Is it better to try and purchase directly from the homeowner or at the foreclosure auction itself. I figured it was worth a look and this is what I have found so far.

I started by searching for foreclosures in my local area, for me this is Collin County Texas with a focus on Plano, Frisco, McKinney, Dallas, Sherman, and the north suburban DFW area. A lot of this information I found on the county websites through the tax-assessors office. They upload the “ Substitute of Trustee” sale documents and you can view them, about 50% of them have the address listed. The other ones list the CAD address by block, I haven’t figured out how to decipher those yet. I am guessing a trip to the County Assessors office will let me know how. After I have the address and name I have been putting together analysis on the houses.


I have compiled a list of about 22 houses set to be auction on May 3rd. I really want to see how the sales price compares to the principal balance on the house as well as the average price per square foot for the zip code. Once I am able to recognize a deal it will be about creating a lead funnel for the distressed homeowners. I tried to put myself in the shoes of someone being foreclosed on and came away with a couple of things I think are important to consider. What is the person scared of? How other people will view them. Really they would do anything to stay in their house and keep going forward like nothing ever happened.

It is amazing the amount of resources there are out there to compile this type of data together. You can really get an amazing perspective on local real estate through the county website and some other resources. I have been able to figure out the equity stake the homeowner has, who they are, and get a good idea of the value of the property through the comps.

I will update the post once I have a little more data put together.

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Greg H.Pro Member
Moderator
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
10y

@Mark S.

The properties are listed by their legal description as the physical address is not required in legal documents

If y'all are interested in purchasing at the courthouse steps I suggest the following:

-Subscribe to the Roddy Report(Foreclosure Listing Service as Michael listed as it contains information that would take hours and hours to compile

-Go to the auctions for several months as an observer as lack of knowledge and planning in this arena as mistakes can cost you tens of thousands of dollars

-Understand payment is in cash the day of the auction

- Keep in mind in bigger counties like Collin there are big $$$ professionals

-To your question of is it better to buy from the owner before the auction ?  Keep in mind those same professionals are calling, mailing and camping out at the owner's house to make a deal. Once the Notice of Foreclosure is posted, you have as little as 21 days to make the deal happen.  

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  • Kelcey Land
    Flipper · Colleyville, TX · Member since 2014 · 59 posts · 23 votes
    10y

    Nice work! 

    0Reply
  • Rickey Medley
    Woodway, TX · Member since 2016 · 10 posts · 3 votes
    10y
    Great information! I am also looking for properties in the DFW area and it opens my eyes to a lot of things! Thank you!
    0Reply
  • Rohit Singh
    Real Estate Agent · Irving, TX · Member since 2015 · 32 posts · 5 votes
    10y

    Great Work @Mark S. All the best - Though I would add regarding Foreclosure Auctions 'Caveat Emptor'.

    0Reply
  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Mark S.     Let me save you a few thousand hours of work.  All of that research is readily available.  All of the pros will be using it.  Check out the website

    https://www.4closure.info/

    The people that run that website can also train you on how the auctions work in our area.

    The problem is there are MANY people that will be competing with you.

    2Reply
  • Shital Thakkar
    Specialist · Dallas, TX · Member since 2010 · 511 posts · 252 votes
    10y

    @Account Closed, Great website. Have you purchase any list from this website? How is their training?

    0Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    10y

    @Mark S.

    The properties are listed by their legal description as the physical address is not required in legal documents

    If y'all are interested in purchasing at the courthouse steps I suggest the following:

    -Subscribe to the Roddy Report(Foreclosure Listing Service as Michael listed as it contains information that would take hours and hours to compile

    -Go to the auctions for several months as an observer as lack of knowledge and planning in this arena as mistakes can cost you tens of thousands of dollars

    -Understand payment is in cash the day of the auction

    - Keep in mind in bigger counties like Collin there are big $$$ professionals

    -To your question of is it better to buy from the owner before the auction ?  Keep in mind those same professionals are calling, mailing and camping out at the owner's house to make a deal. Once the Notice of Foreclosure is posted, you have as little as 21 days to make the deal happen.  

    5Reply
  • Todd Plambeck
    Agent/Investor · Murphy, TX · Member since 2013 · 542 posts · 304 votes
    10y

    Excellent post @Greg H.

    0Reply
  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Shital Thakkar  I can recommend their training and their reports.

    0Reply
  • Mark S.
    OP
    Plano, TX · Member since 2014 · 197 posts · 33 votes
    10y

    Thanks @Account Closed  Those are some great suggestions.

    I checked out both of the reports and they make it a lot easier.  I reached out to some county clerks as well and they have a lot of the same information and will send it to you.

    I think my main question at this point is it going to make more sense to try and purchase the properties at auction or during the 20 day period between when the list goes public and the auction.  For example you could secure a contract during that period and get the homeowner out of foreclosure.  Or you could purchase the property at auction.  

    I have started to look into both of these and will put together some data on which has a higher ROI. The markets are so localized it may be very hard to know where the better deals are.

    Thanks for the feedback!

    0Reply
  • Dean Weltman
    Investor · The Colony, TX · Member since 2014 · 192 posts · 66 votes
    10y

    @Mark S.

    Talking to the home owner is the better way to go - if they'll talk to you and be reasonable. Sometimes they get where they are because they won't reach out and they are not reasonable, hence their situation. And if you can bend their ear you don't have a competitor next to you shouting while they're holding up a fistful of cash (maybe literally, lol). 

    And when you can't get a deal, or enough deals beforehand, you go to the auction. Or maybe you're too busy or too lazy (like me) and you go to the auction hoping for a little luck...

    See you at lunch next week.

    0Reply
  • Mark S.
    OP
    Plano, TX · Member since 2014 · 197 posts · 33 votes
    10y

    Thanks @Dean Weltman,

    Yeah those are some great insights.  It is definitely a competitive market getting into the pre-foreclosures in north texas right now.  The home owners seem to be inundated with requests to buy their houses.

    I did run some analysis on the buying the properties at auction versus the sale prices over the last 90 days in the same zip code. Based on price per square foot for the zip code 75070 in McKinney the homes are selling for about 30% less at the auction than they do through conventional MLS sales. The average price per square foot for 75070 at the auction was $95.75 for March and sales through MLS showed an average price of $128.22 per square foot.

    If you could get the homes directly from the homeowner I would imagine there would be some further increase in your margins, maybe up to 40%.  The margins are still pretty healthy depending on the state of the house.  If you walked into a huge amount of repairs you could pretty easily be up a creek.

    Does anyone know how the assessments work when purchasing the property from the homeowner prior to the auction.  A lot of the homes on the Scrubb report showed unpaid balances of $10-20k below the assessed amount.  My understanding is the assessed amount is the fees charged by the banks during the foreclosure process.  Would these be paid off in full directly to the bank?  It would make sense if all of this information was on the closing statement provided by the mortgagee to title.

    Thanks for the feedback

    0Reply
  • Mark S.
    OP
    Plano, TX · Member since 2014 · 197 posts · 33 votes
    10y

    The auction sales also beat out the REO/Lender sales for 75070 in McKinney as well. The last 90 days average price per square foot was $120, the auction is still coming out to $95.75 per sq ft.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mark S. @Greg H.   I just got one of my Oregon vendors turned on to TX foreclosures and we bought 6 homes first time out.. so I know it can be done. that was at the April auction.

    the trick in my mind is to find those tweener counties were the big dogs are not there beating you up.

    there were two major buyers at the auction we attended.. but we still got out deals.

    We were scrambling though.. as we had never been to a Texas foreclosure auction and did not realize they did not read the address first then the legal... they ONLY read the legal.. LOL you should of seen us scrambling.. Luckily being the life long real estate broker I am I am pretty versed at legal descriptions.   but we missed a few because of this issue

    We brought 1.2 million that day and spent 685k .... goal is a million a month... We brought a team in town 5 days before drove 90% of the properties.. ( again first time ever there)  now we know areas not to even drive..

    So lets see how we did... others were bidding on the houses but we got ours.. won't know if this is a good play until we resell and see what we made..

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  • Dean Weltman
    Investor · The Colony, TX · Member since 2014 · 192 posts · 66 votes
    10y

    @Mark s.

    I'm not familiar with the area you researched, but I would be curious to know the average home age at the auction versus MLS for the same time period...

    There's an Texas auction expert floating around here by the name of @arnie Abramson. You should look up his forum posts.

    @jay hinrichs

    Congratulations. Try to leave me some crumbs at the next auction!

    0Reply
  • Mark S.
    OP
    Plano, TX · Member since 2014 · 197 posts · 33 votes
    10y

    Thanks @Jay Hinrichs and @Dean Weltman,

    I totally agree with hitting up the smaller surrounding counties in DFW.  My rentals are out in Sherman which is about an hour North of Plano towards Oklahoma.  There is a lot of development out in this direction with the expansion of the 75 freeway.

    The age of the homes seem pretty in line with what I have seen sold by realtors in the area.  I think the inventory is pretty similar.  

    I have also filtered the lists to target homes with the least amount of remaining balance on their loans.  This will be the first target group to purchase from before the auction starts.

    0Reply
  • Dean Weltman
    Investor · The Colony, TX · Member since 2014 · 192 posts · 66 votes
    10y
    Originally posted by @Jay Hinrichs:
     I just got one of my Oregon vendors turned on to TX foreclosures and we bought 6 homes first time out.. so I know it can be done. that was at the April auction.

    Jay, which county did you go to on this trip? DFW is primarily located in four main counties and probably crosses or is adjacent to double that number; and I believe they all  hold auctions on the same day.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Dean Weltman  as they say Texas is a BIG state plenty for all.

    I would not say that about our area here in PDX there is not plenty for all.. ERGO we have to fly all over the country finding the locations were we can play

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  • Dean Weltman
    Investor · The Colony, TX · Member since 2014 · 192 posts · 66 votes
    10y

    @jay hinrichs

    I posted a question to you above, but it looks like it got lost in the quote I included. It was this: 

    Jay, which county did you go to on this trip? DFW is primarily located in four main counties and probably crosses or is adjacent to double that number; and I believe they all hold auctions on the same day.

    0Reply
  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Dean Weltman  What you mentioned to @Jay Hinrichs   is correct.  All the foreclosure auctions are held on the first Tuesday of the month in Texas.

    Each county is a little different.  The last time I seriously bought in Dallas County, we had 4 authorized to bid.  It is very easy to miss an auction there.

    In Collin County, one or two people can handle it without missing anything.  If the properties are all being auctioned by MERS then one person can do it.

    There are social aspects of the auctions.  BE NICE.  If people do not like you they will push the price up on anything you want.

    I know people in Collin County that routinely buy homes in the $400,000 - $600,000 without as much as a drive by.

    This sounds crazy, but I have actually paid people off in cup cakes not to bid against me.  LOL

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Account Closed  collusion is alive and well at auctions.. money, cup cakes, makes no matter don't get caught there are many that have gotten in serious trouble over that ... FBI makes a sting a year somewhere in the US.

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  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    10y
    Originally posted by @Mark S.:

    Thanks @Dean Weltman,

    Yeah those are some great insights.  It is definitely a competitive market getting into the pre-foreclosures in north texas right now.  The home owners seem to be inundated with requests to buy their houses.

    I did run some analysis on the buying the properties at auction versus the sale prices over the last 90 days in the same zip code. Based on price per square foot for the zip code 75070 in McKinney the homes are selling for about 30% less at the auction than they do through conventional MLS sales. The average price per square foot for 75070 at the auction was $95.75 for March and sales through MLS showed an average price of $128.22 per square foot.

    If you could get the homes directly from the homeowner I would imagine there would be some further increase in your margins, maybe up to 40%.  The margins are still pretty healthy depending on the state of the house.  If you walked into a huge amount of repairs you could pretty easily be up a creek.

    Does anyone know how the assessments work when purchasing the property from the homeowner prior to the auction.  A lot of the homes on the Scrubb report showed unpaid balances of $10-20k below the assessed amount.  My understanding is the assessed amount is the fees charged by the banks during the foreclosure process.  Would these be paid off in full directly to the bank?  It would make sense if all of this information was on the closing statement provided by the mortgagee to title.

    Thanks for the feedback

    The standard used by most here on BP to purchase properties is to pay no more than 70% of ARV(After Repaired Value) MINUS any repairs needed. Your analysis seems to indicate that people are buying for +-70% of MLS sales square footage. I will tell you this while it may not seem like it to you at this point is a very narrow margin. A big unforeseen repair and you are sunk !! The deals you are describing are not necessarily deals. The big boys are buying these properties with the goal of having success 8 out of 10 times. With most of us if those 2 failures are at the front end we are out of business

    I am not a competitor and I am not trying to dissuade your from your business model but my suggestion would be to spend some time and take a few dry runs and follow the properties post auction to 'learn the ropes" so to speak

    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Greg H.  very astute advice.... and so true about those that do it for a living.. its most certainly income averaging.. anyone who says they bat 1000 at auction is not telling you the truth LOL.

    that's like a lender saying they never have a default.

    Where I see some broken hearts and spirits.. is those that buy their first one and its a bummer..

    and some of what I have seen is really sad.. IE buying a second thinking you were in First only to get wiped out 30 days later.. IE bid was 100k on 500k home.  To naïve to realize that when no one else bid they just thought they were smarter or were lucky or whatever.

    The one's that I see that have done well over my 30 years of buying these things, that do it onzee twozee are Generally Real Estate brokers who really know the market and the score..

    Average joe off the street they have a tough go of it. just not knowing what they don't know.

    or like what others have posted Newbie getting run up on a property and everyone dumping it on them... this is very common.

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  • Mark S.
    OP
    Plano, TX · Member since 2014 · 197 posts · 33 votes
    10y

    Thanks @Jay Hinrichs and @Greg H.

    So we actually made contact with two out of three homeowners today.  We are trying to get the for the pre-foreclosure prices.  The margin should be higher.  Greg I totally agree with you analysis of the margins.  They are to slim, one problem and its over.

    I will let you know how it goes tomorrow.  So far we have found some great deals

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mark S.  did you door knock them?

    your so fortunate there.  on the west coast most pre foreclosure activity is illegal.

    In Oregon you have to be licensed foreclosure rescue person.. that's ( attorney, mortgage broker, RE broker)... and even if you buy it ( owner occ is what I am talking about) you can't lease it back that's illegal.. and if you sell in a certain amount of time 80% of the profit has to go to who you bought it from.

    Now granted just like all over the US.. this law is broken everyday. but its on the books. and it put me out of the pre foreclosure business when the law was enacted in 07....

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  • Dean Weltman
    Investor · The Colony, TX · Member since 2014 · 192 posts · 66 votes
    10y

    @Greg H. @Mark S. @Jay Hinrichs

    DFW is really saturated with people trying to make some money off this market (myself included). Everytime I open my mailbox or open my door there are yellow letters and 'ugly houses' postcards falling out in piles. I put out a FSBO sign on the last two houses I sold and it seemed like half the calls in the first week were from investors or owner occupants that had seen Flip This House and wanted a deal.

    There are some heavy-hitting 'corporate' wholesalers (New Western, etc...) that seem to be getting a lot of deals and they're selling many of them at a post-gentrification, add 1000 sqft, tear-down, etc. type of ARV.

    Also, was talking to my Realtor today (great guy, investor friendly that primarily works Tarrant county and the mid-cities area; let me know if anyone wants his info) and he was telling me of a company that goes to local auctions with hedge fund money in their account and buys almost everything that falls within its parameters for year built, size, etc. and they don't have a problem going close to 90% of ARV. It can be hard for us small fries with limited experience and even smaller bank accounts to play in this sandbox right now, so going back to working those pre-foreclosure lists is getting more important as little guys get out-priced at auctions. 

    Mark S., let us know how it goes, and best of luck!

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