Auction.com???

General Landlording & Rental Properties
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Auction.com???

Kizzy Brooks
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.

Any advice will be helpful!

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Jean Norton
Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
12y

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!
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  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    10y

    You might reach out to them and ask.  I was already active when they started that program, so they reached out to me.

    1Reply
  • Account Closed
    Investor · Bushnell, FL · Member since 2016 · 456 posts · 224 votes
    10y

    Danny, I would drive by it and if it doesn't look occupied,  knock and if someone answers just say hello I was wondering if you have been saved ? Do you mind if I talk to you fir the next 6 hrs  about how I can help you save your soul when you *** on ? Hehe they will shut the door in your face but at least they won't know you were there checking out the property .. And I highly doubt they will remember you if you do win it and have to approach then as their new landlord. Sometimes you have to get creative. This might be one one the biggest purchases you might have ever made, try to take as much chance out of the equation. Hopefully it will be emptie and you can poke around and look through some Windows. 

    Good luck , and let us know how it goes .. Don't keep us hanging ..lol . 

    God Speed 

    2Reply
  • Sohail Ahmed
    Architect · Keller, TX · Member since 2016 · 32 posts · 3 votes
    10y

    I am just getting into REHAB business. I was the winning bidder on an auction.com property on Aug 1st. This is how the process went: After winning the bid they sent me the contract to purchase thru Docusign and instructions to transfer the EMD. In the contract there was an option whether I want to choose seller's prefered closing/title company or want to choose another. I had asked the local closing/title company about the title insurance and document cost. I chose seller's title company because their cost was less than the local company. I transferred the EMD to the closing/title company account. Bank took 2 weeks to sign the contract and send it to the closing company. Closing was scheduled for Aug 29th. But bank never sent the closing company the title deed. After waiting for a week after the scheduled closing date and calling closing company and auction.com several times and getting no definite response I have asked the auction.com to cancel the contract and return my EMD. Today they sent me the cancellation form thru docusign that I have signed. Hopefully I will get my EMD back.

    0Reply
  • Account Closed
    Investor · Bushnell, FL · Member since 2016 · 456 posts · 224 votes
    10y

    Sohail, 

    I'm not sure I would have been so quick to ask for a cancelation especially if you won the auction at a good price, unless the market is different in Keller, Texas than it us here in Central Florida. Here it is getting ever difficault to find really reduced properties like they were even 3-5 months ago. It seems like everyone and their brother is trying their hand at wholesaling and most of the inexperienced one are wanting to get rich on every property. I have bid on a auction home 3 times never getting to the reserve which I can only marine is so close to the previous asking price that it won't be financially profitable enough to take the risks involved. I would be happy to know I had a deal closing on a house even if it took a month , the money down isn't that much considering the profit potential and the fact that I doubt the house will sell for the same price or less in the future .. Times are a changing .. All that being said congradulations on starting your investment life .. I wish you only the best and please use Bigger Pockets to bounce ideas or questions just like the situation you found yourself in to get advice from seasoned investors .. 

    God Speed ..   

    0Reply
  • Shital Thakkar
    Specialist · Dallas, TX · Member since 2010 · 511 posts · 252 votes
    10y

    Hi @Jean Norton , It is great to know Auction success stories... I never tried and exploring auction now. can you please guide...

    • How much was the market price and at what price you get properties.
    • Have you tried any commercial property from them (Ten-X)
    • Is it better to bid in remote county then major metroplex?
    • What is your exist strategy? Flip or buy and hold? 
    0Reply
  • Brandon HalleyPro Member
    Flipper/Rehabber · Durango, CO · Member since 2016 · 38 posts · 17 votes
    10y

    I have a bid on a few properties with them and have figured out a few of there tricks. 

    First off, yes they will bid on the sellers behalf although it is impossible to tell whether it's them or another serious buyer. It is part of there strategy to make sure you place your 'highest and best.' 

    They contract these properties generally through a bank which decides on a reserve price. This reserve price I have found out comes in two categories: hard and soft (just ask). If it is hard, they will not entertain an offer below reserve. If soft they will. At the end of an auction, the bank will get a report with information on the auction and participants with notes attached. I have found this to be the secret passage of communication with the banks asset manager. You can ask Joe Bob at auction.com to specifically, and politely, put a message in your notes. I.E. 'This is my highest and best offer. Next week it will be less.' If a property doesn't meet reserve it will come back up for auction again the next week until the contract is up. You can find out how long this contract is just by asking. I have seen some properties get re-auctioned for months.

    The only thing they are not allowed to tell you is the reserve price. But even this you can get a general idea of. If you get in touch with there 'sales team' they have a system of grading your bid on its strength (how close it is to reserve). The grading is A through F. Just like grade school. A+ is it's at or above reserve. F being way off. I am currently working to plot my bids on properties while obtaining a rating each time in order to crack there algorithm (Actually, its looking pretty linear). Also, there bid increment decreases as you get closer to the reserve.  If you see it goes from 5k to 2.5k, you are getting closer. Minimum bid also drops in the last 15 minutes or so unrelated to your proximity to reserve. There may be more to this. 

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    10y

    I've looked into auction.com and actually registered for an auction once. Everything is slanted in their favor and I decided I wasn't willing to accept that much "unknown" in that significant of an investment. I'll stick to REO properties from MLS.

    0Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    10y
    Jean Norton - Could you answer at Shital Thakkar question above. I am interested to hear your answers. Thanks!
    [email protected]
    Quality Builders4.968 Reviews
    WebsiteView Page
    0Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    10y

    So sorry for the delay!  Here is my answers to your questions based on my personal experience.

    • How much was the market price and at what price you get properties.

    When I first started there were a lot of Fannie Mae properties.  It appeared that once it hit auction, there were a totally different set of asset managers.  You could bid the same price for months with no result, but once it hit auction they would accept your bid.  

    Now the reserves tend to be a little high for me.  Depending on the location pricing can vary.  There were several times that even though I didn't get the high bid, they reach out to me and ask if I will still honor the bid I made.  Those are my favorites!  The first one was on well-water and that equipment was vandalized so a mere $5k for well equipment and $2k for cleaning up the unit netted me a pretty darn good return.  

    I've also bought properties where I've lost money - but mainly due to excessive hard money rates, extended construction times going into extension fees.

    I really don't like going above 50% of the ARV, but the margins are getting tighter now...so buy, fix, rent refinance can work if you are bullish on the housing market in the area of your investment.

    • Have you tried any commercial property from them (Ten-X)

    I've looked at some of the commercial properties.  One had an issue with ground contamination, etc.  Luckily they disclose more issues regarding commercial than on residential.  I have never bid or bought from their commercial side.

    • Is it better to bid in remote county then major metroplex?

    Personally, I try to stay within an hour from a major airport.

    • What is your exist strategy? Flip or buy and hold? 

    I just sold one I would have loved to have kept as a buy and hold but I need cash right now.  So it really depends on my bank balance if I buy with intent to hold or buy with intent to flip.  

    I also help others buy from auction dot com due to my special relationship and long term experience, and I charge a fee.  However, most of the seller reserves are way too high right now.  I say  that, but I did just get a property for a friend in Cleveland for $7900 + my fee.  Advertised as a 4/2 it actually has 7 bedrooms, so she's making out really good on that one.

    4Reply
  • Stephanie Polydoroff
    Real Estate Agent · Scottsdale, AZ · Member since 2016 · 25 posts · 6 votes
    9y

    @Jean Norton Hi there. Maybe you can help! There is a condo I am interested in purchasing that will go up for auction next week. It is currently listed on the MLS and has a tenant occupying the condo until Nov 30. On Monsoon it looks like Fannie Mae was the last to purchase this property a few years back. The opening bid is $38k but I am seeing a loan amount of $148k.

    If the condo goes to auction and I win it for less than the 148k loan amount will I be responsible for the remainder of that loan or will I only pay the winning bid amount?

    0Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    9y

    Here's one BIG question: is it listed under Auction, or under "Bank Owned and Newly Foreclosed"?  There's a big difference regarding liability that transfers through title.  PM me to discuss further.  Thanks!

    1Reply
  • Steve T.
    Real Estate Investor · Norfolk, VA · Member since 2014 · 33 posts · 43 votes
    9y

    I bought a 3/2 thse valued at 106k at auction with a high bid of 48,900.  They could not deliver clear title after 6 months, so they let me out of the deal.

    It was re-listed, and THIS time I bought it for 25,300.

    The good news is that it was being rehabbed by someone, and was 95% finished when I finally got it.  Such a sweet deal!

    1Reply
  • Megan Arzt
    Investor · Moab, UT · Member since 2016 · 101 posts · 27 votes
    9y

    @Jean Norton  or anyone else who might know:

    Is it a huge issue when the foreclosure is occupied by the past owners?

    Also, when there is "Title Information" included does that mean it has a clear title?  Should I still have my local title company do a search?  I'm not sure if there will be enough time or not for that.  

    Thanks in advance

    0Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    9y

    @Steve T. Awesome!!!!  Persistence is key!

    0Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    9y

    @Megan Arzt - Most of my purchases were vacant by the time the property closed.  You must ask for clear title if you get the high bid.

    Regarding occupants that won't leave, yes, you can look into the public records to see if you have a serial squatter.  I don't bid on those.

    For example, I was just presented with a property in Chicago by Auction dot Com, that looked really nice.  Once I looked into the county records I could see the occupant has fought the foreclosure since 2012, even vacating the first foreclosure.  By researching the public records I could tell this guy was a professional squatter, so declined the purchase.

    0Reply
  • Bill E.
    Pittsburgh, PA · Member since 2016 · 126 posts · 18 votes
    9y

    How do you figure out if the title is clear and there are no leins on the property? Have you ever bought one with a lein on it?

    0Reply
  • Cassidy BurnsBusiness Member
    Investor · Alexandria, VA · Member since 2016 · 861 posts · 460 votes
    9y

    Hi @Jean Norton I have the same question as @Bill E.  How do you go about finding out if the title is clear and there are no liens on the property?  It has the title information sheet attached but I am having trouble reading it.  Anything in particular that I should be looking for?  The current property I am looking at also says it is occupied, should I be cautious??

    [email protected]540-960-1507
    0Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    9y

    Sorry for my delay!  When you purchase a recently foreclosed property, you have the choice of getting title insurance or just accepting a quit-claim deed.  I always pay for title insurance.  

    I had a really cheap property in Florida under contract for like $28k, but come to find out there was a lien for over $1m on it.  Had I not chosen to get title insurance, that lien would transfer with the land.

    1Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    9y

    This thread has been going on for a long time.  Should I plan a conference call on this?

    5Reply
  • Ian R.
    Real Estate Investor · San Antonio, TX · Member since 2016 · 143 posts · 167 votes
    9y
    Jean Norton , thanks for all your insight thus far. If you'd be willing to lead one, I know I'd definitely be interested in joining a conference call on this.
    0Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    9y

    Actually I'm doing a presentation for a local meet up group tomorrow.  If that goes well I'll open it up to a webinar.

    1Reply
  • Megan Arzt
    Investor · Moab, UT · Member since 2016 · 101 posts · 27 votes
    9y

    Thanks @Jean Norton.  I would also love to see your webinar!

    1Reply
  • Steven PaynePro Member
    Investor · Clifton, TX · Member since 2016 · 69 posts · 14 votes
    9y

    @Jean Norton I would watch!

    0Reply
  • Jean Norton
    Flipper/Rehabber · Austin, TX · Member since 2009 · 405 posts · 168 votes
    9y

    The presentation I gave was well received.  The holidays make it pretty tough for me to schedule a time, but I will try to get a webinar in soon.

    0Reply
  • Dave Anstatt
    Real Estate Investor · Maplewood, NJ · Member since 2013 · 33 posts · 18 votes
    9y

    I've bought two properties earlier this year through Auction.com and on both used the sellers closing company which is where I sent the EMD. I'm currently the winning bidder on another where the seller and Auction.com have agreed to allow my attorney hold the EMD in his trust account. I just needed to send the wire verification as part of my documentation.

    Although I'm not yet at VIP status like @Jean Norton, A.com has waived the required deposit money on all bids for me.  I guess I've arrived at some status level based on my previous purchases.   I understand there are other benefits to VIP as explained by an A.com rep who stated I needed to purchase 5+ properties/year from them to get there.  Does that sound right @Jean Norton ?

    1Reply
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