Investor · Conroe, TX · Member since 2013 · 30 posts · 8 votes
Hello,
I'm new to BP and was just wanting to get some opinions.... Have any of you ever used auction.com to purchase foreclosures? I see postings from them it seems like everywhere and I just want to know if this is a good resource for investment properties.
I've purchased most of my deals from Auction.com and here is my assessment:
Beware of the shills. I don't know if it's true, but I've heard from the other side that the practice is used. Again, I don't know if it's true or not, but just don't get caught up in a bidding war. There are plenty of other deals.
Yes it's a pain in the butt to tie up all your money on EMD's while you wait for 21 days for the bank to decide if they will accept your offer or not. It doesn't seem fair, but those are the rules of the game.
Yes, sometimes your EMD gets lost. I've always received my EMD back, even though it may take a month or 2.
Always list an agent that represents you, even if they didn't represent you. This agent will be on your side and shield you against the transaction company's and the BS "attitude". It doesn't cost you any more, and your agent will be most appreciative.
Always check to see what the property wouldn't sell for when it was listed. If the auction price is getting close to that price, then go back and start looking at the MLS. Sometimes I've seen too much competition and utilize other strategies to get my deals.
I've found that the approval rate for auction properties are much higher than prior going to auction, much like there is a different set of asset managers looking at the deal.
Good luck!
Whoops. I think I understand now. What it actually says is that....
.....I/We have been informed by Un-named Bank that we have the right to select a title insurance company to provide required insurance in connection with this transaction......
I'm guessing this wording about Title Insurance is how it's OK to charge me the settlement and abstract fees, even if I choose my own closing company. Live and learn. It seems to be limited to these two charges totaling $1045. I'll definitely pay closer attention to this part of the contract if we do an online auction again.
Question for the group here. Do most of y'all have cash on hand for the entire amount or are y'all getting a winning bid then gathering up your financing through a HML or conventional source?
Ours is a cash purchase. It wasn't even 24 hours after the 'auction' end until we were required to show proof of funds and proof that the Ernest money had been wired. The property we pursued did specify that it was a cash purchase beforehand, if I remember correctly. But, a few times as they were prepping paperwork - we were asked if we were paying cash. I thought that was odd, but maybe just a verification because I'm sure folks get confused sometimes.
I always make sure I get title insurance. I don't involve lawyers. I always tell them I'm using cash, but they are OK with hard money as well. In fact, one time they asked if I was paying cash, and I answered "cash or hard money", the response from them was "same thing".
@Jean Norton How did you get to be VIP Gold level?
I recently closed on my first auction.com property. It took longer than I would have expected considering it was a cash deal. I am happy with the value so far, but its always the things that sneak up on you that get you.
Hi Ryan - I don't know how to get to that level now, but I was invited in when they first started based on my performance. I don't think I was really at a high volume at that time, but certainly several deals a year. Once I got into VIP my business soared.
I used to try to teach people how to get around the online auction process, but now I will just secure the deal for them (for a fee).
Also, yes, there are often delays when purchasing from them, and they are the boss.
@William Lunsford I just closed on a "cash only" deal using a line of credit on a paid off rental house that I own. I am in the process of refinancing to get the LOC paid off.
@Ryan Parnow - I've found when the prices start low, to figure about 2.5 times the starting price. Also expect about twice for the higher priced properties.
One of the benefits I get as VIP is they will share the "indicative bid" with us (not all of the sellers allow this), and when that "indicative bid" is reduced, they let us know immediately.
I always make sure I get title insurance. I don't involve lawyers. I always tell them I'm using cash, but they are OK with hard money as well. In fact, one time they asked if I was paying cash, and I answered "cash or hard money", the response from them was "same thing".
@Jean Norton: I am with the client of mine registering for a bid on the property right now. From what I know - the title insurance abstract takes 5 biz days to issue, and it is not for free either.. Sure - T&E people have their insider sources to check the title, but without formal abstract there is no guarantee to issue it (or so I was told). Am I working with the wrong title company?
At the start of the auction there is a disclaimer that it could be just a quit claim deed. I am interested to get my client in touch with you so you can hold his hand for this transaction (for a fee). I will reach to you via your website, or please PM me via BP if it is easier. The auction closes in 3 days... and we have not put any bids yet. Thank you!
Hi Lyuba - When you bid on a property where they offer a QCD, with auction dot com, you do have the option of purchasing title insurance on your own. That's what I've done every time. There was actually one I bid on for $28k, and come to find out later there was a million dollar lien on the property. I was able to blackout with no problems.
You also have the option to choose your own title company, which even though it costs more (sometimes), it's a lot easier since many of these closing companies the sellers hire are the "low-bid" type and have a hard time resulting in smooth closings.
I'm new here, and reading this thread has me interested. I've also looked into Auction . com and am wondering if you can go and look in these properties at all? If you bid and win, is there a way to back out if there is a major problem with the property? Or is it completely as is?
@Jean Norton Hi Jean, you just answered my main question, which was whether or not you can purchase properties on auction.com w/ hard money.
With you being a vet would you mind answering my next two questions please:
1. What happens if you purchase a property that looks fine from the pictures, and upon inspection you realize it has major issues such as foundation problems etc? Can you back out of the deal?
2. What's the best way to go about making sure the title is clean on properties that you're bidding on to make sure there aren't any hangups?
Auction.com is primarily used as a clearinghouse by the banks to hold their auctions but they are required to hold to sell foreclosures, they generally tend to put in a reserve baby equal to the amount of the judgment that they got in court. It's a step they are apparently legally required to take but the system is obviously quite rigged.
@Jean Norton Hi Jean, you just answered my main question, which was whether or not you can purchase properties on auction.com w/ hard money.
With you being a vet would you mind answering my next two questions please:
1. What happens if you purchase a property that looks fine from the pictures, and upon inspection you realize it has major issues such as foundation problems etc? Can you back out of the deal?
2. What's the best way to go about making sure the title is clean on properties that you're bidding on to make sure there aren't any hangups?
Thanks!
1. They have let me out of a few really awful properties. One the black mold was so bad and mushrooms were growing on the basement wall. My account manager told me I couldn't back out due to mushrooms.
Another one was pretty interesting - a good 120 feet of seawall on a half acre lot in Florida (on the water). As it turned out 40 feet of the seawall had eroded. Since seawalls require federal permits they let me out.
There are times where further damage occurred during the escrow period. Pictures and proof allowed me out of that too.
The don't let you out because you didn't do all of your due diligence. I research the pictures and I even go back in time to find when it was listed as a short sale, or even a time when the current borrower bought the property. I can find bits of information like, "Roof replaced 3 years ago", etc. That helps me a lot.
Mean squatters. That was another good one.
2. Ask for title insurance. I was about to buy a property for $28k via QCD, but I requested title insurance. That uncovered a million dollar lien. I got out of that one too. I always let the people know that I will always ask for title insurance just in case they aren't sure.
Right now I'm finding a lot of properties in rural/gang areas and the reserves are way too high. Just like any other acquisition strategy, keep watching the property. At some point they realize they have priced themselves too high, and there are times they've come back to me and asked if I would still honor my bid. Sweet!
@Jean Norton thank you so much for your knowledge and insight. I'm looking at a property in ATL that I want to bid on in a couple of days, and being brand new to this I don't want to get hung up.
Would it be my responsibility during this period before the auction starts to make sure there aren't any deal killing repairs under the hood?
It seems like after you win the bid you should have an inspection period or something similar.
If it is my responsibility now, how would I be able to inspect the property if there isn't any information on how to enter the premises?
Tyler , I have my suspicions that Hubzu dies shilling bidding also. I purchased my house last year through that site , thing is the house was on and off the auction block many times over a 4 year period with no bidders what so ever .. See it was occupied ... By me .. I had a prepaid 5 year lease that was not breakable .. So nobody was interested in it. when my wife and I finally decided to by it after cashing out our other house in Ga. I contacted the seller agent and made a offer, he responded that the bank did not want to sell it to us period. But it was going back on the auction block soon. So we got creative and had someone we trust place a bid for us but surprise the hoyse had a bid on it for the first time after numerous actions . It happend to be just under what up we had found out the bank was willing to take fir it . So we put in a bid about $1500 more and said we will see what happends . We won .. The closing went smooth but I know that that first bid was bogus .. Still we got the house fir about 25% of arv so we're happy . Good luck everyone and God Speed
Danny Carter you just have to figure worst case scenario in your bid. And also allow for costs to get the occupant out...either cash for keys, or carrying costs while you take the legal road. GA is not as bad in general as some states on evictions, however I've heard a few horror stories.
I've had better luck with pre-auction bids when buying from Auction.com, rather than dealing with $10K or even $25K bid increments during the sale. Usually your max figure is somewhere in between!
That site attracts a lot of new investors who are willing to overpay, so they milk it.
@Jean Norton@Kim Bayless Thank you both for your insight and advice really invaluable at a time like this for a newbie. I'm going to dive in and take a stab at the house I'm looking at. Its built post 2000 so I'm hoping that foundation issues will be non existent and I'll have a 20k max rehab on it. Wish me luck guys!!
@Jean Norton How did you get Gold Star status on Auction.com. I have brought over 20 houses thru them in the past 2 years and have never been offered that.