Real Estate Investor · Philadelphia, PA · Member since 2016 · 25 posts · 12 votes
Has anyone purchased a property at an auction using a hard money lender? How extravagant was the process with the lender? How smooth was the transaction at the auction?
I'm thinking of using Auction.com
Any input would help, thanks
Real Estate Investor · Philadelphia, PA · Member since 2016 · 25 posts · 12 votes
9y
thanks for the feedback Alex. I'm considering using a hard money lender. I'm extremely new to the process...would a hard money lender br a viable option for this type of transaction?
Phil: Alex is right it should be no issue as long as your are not buying a occupied property. If it a occupied property and lets say the town you are buying in needs transfer stamp then you may have issues.
You cannot get a transfer stamp until there is an inspection in many town so if it is occupied then it can be an issue. Just make sure you run a FOIA request with the town before you buy a auction property just to be sure you are not stuck with anything.
Also make sure you are getting title insurance with the property. You lender will require that. You attorney can take care of those issue if you are not familiar with that.
They could, but the hard money lenders I have spoken to need to know which property you are buying in advance. So far, I haven't had any luck with hard money lenders for an auction property. Do you know of any hard money lenders that will work this way? @Alex Deacon how were you able to use hard money at a foreclosure auction? Who was the lender?
Investor · Hillsboro, TX · Member since 2017 · 358 posts · 245 votes
9y
auction.com is great to buy from, but I have had funds secured before bidding. Later I refinanced after rehab to either payoff investor or to buy out partner.
Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes
9y
Sorry to dig up this older discussion- my understanding is that 99% of Auction.com listings are "no financing, cash only" and therefore a hard money lender or any other lender is not possible.
@Andrew Holmes are you saying you have closed on an Auction.com "no financing" sale using a lender?
@Brian Erlich there is a hard money lender I know, Barnett Capital based in Northbrook IL, that will assist buyers at the foreclosure auction. The lender will require a 50% LTV at the sale, and I don't even know if they offer that outside of the Chicago area.
On some properties that are vacant yet they say that no financing is available in a few cases they have allowed financing. Don't count on it but that may be an option depending on the property
Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes
9y
@Andrew Holmes That is interesting thank you. At what point do you discover that you can in fact use financing? After you have won an auction or before? Do you have cash to fund if the financing does not go through?
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
9y
@Phil Evans - I can introduce you to the Philadelphia area auction.com representative; if you wish that, please send a colleague request with a message so I can share that info.
@Andrew Holmes - Pennsylvania does have transfer taxes, but they are collected at the recorder of deeds so there will not be any issue on paying transfer taxes without a municipal inspection. That being said, the municipality will usually require a Certificate of Occupancy - and passing the inspection will be needed for that.
Has anyone purchased a property at an auction using a hard money lender? How extravagant was the process with the lender? How smooth was the transaction at the auction?
I'm thinking of using Auction.com
Any input would help, thanks
We leveraged hard money for auctions a few times on deals in Texas. We had multiple loans w/ the lender & had completed a number of flips so there was a level of trust that made it work. We only bid on properties that had 10 day or more closings giving our lender enough time to do his due diligence. The challenging part w/ this approach is convincing the title company to record a mortgage & issue lenders title insurance on a supposed cash deal, but we had lender who knew how to work the system (i.e. he knew all the processors & owners at every Title company)
Real Estate Agent · Chicago, IL · Member since 2016 · 283 posts · 71 votes
9y
@Phil Evans using hard money on auction deals work. Have done a few deals via auction.com this way. Their biggest concern purely on moving the deals in my experience as they run into many folks who 'catch and release' their properties.
Specialist · New York, NY · Member since 2018 · 26 posts · 7 votes
8y
Thanks guys!. Can anyone explain the process for hard money at auction? Do pick one property show this property to the Lender. He does his DD. Then set a limit for purchase price which you and the hard money lender are comfortable with. They go with you to auction. Then bid and hope you win the bidding process? They then buy the property?
Rental Property Investor · Stow, OH · Member since 2016 · 28 posts · 17 votes
8y
In Ohio the HML that I have tried to go through to buy properties at auction say they will not give the money up front to purchase the property because they do not know if the title is clear/without leins/etc. So I have to pay cash for the property within 30 days of winning the bid, get clear title, then they will loan me the 60% ARV. Does anyone else have this same experience?
I was told that in my area they do not give you title insurance when you buy a property at an auction you have to wait 12 months before any title company will give you title insurance
@Phil Evans using hard money on auction deals work. Have done a few deals via auction.com this way. Their biggest concern purely on moving the deals in my experience as they run into many folks who 'catch and release' their properties.
Hey phil, You mean they don't like when someone buys it and sells it right away? I was actually looking into that.
Does anyone know how long the process is with buying an auctioned house?