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.