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!
@Dave Anstatt, thanks for the info. Regarding the properties you purchased, I'm curious to know how you paid for those. Are you using your own capital or are you using another strategy (HML?). Also, did you have any issues with getting a clear title? Did you have to settle any liens? Thanks...
@Ian R., I used private money on one and cash on the second. My experience on these Auction.com purchases was that they took long to close and because there is no seller contact (banks in both cases) it was hard to find out what the delays were stemming from. I believe in the end they were due to the slow nature of the foreclosure process in NJ and in at least on case the bank hiring and then firing at least on attorney in handling the foreclosure. Her's a brief synopsis of the deals
1. SFR listed as occupied on the auction listing. This was in fact not occupied, the bank had changed the locks and hired a management company to cut grass. collect mail etc., but still considered it occupied and would not grant me access. I actually showed up on the day I won the bid and ran the property management rep. who told me he was there to repair roof and do a cleanup of the furniture etc. I figured I had hit the jackpot, only later to find out his bosses eventually told him to basically take pictures, winterize and move on. I suppose they were notified of the impending sale and told to hold off on scheduled work. Anyway, this was on May 5, 2015. After countless contract extensions and requests on my part to Auction.com and title company contacts as to what the hold up was, I finally closed in early Feb 2016. That's right 9 months. Very frustrating in that they would extend for 30 days, which seemed reasonable the first two times, however each time the date came and went and then they laid another extension on me. I had the opportunity to kill the deal and get EMD back, but I kept at it as agonizing as it was. In the end I netted 65k after construction, interest, closing and holding costs.
2. SFR listed again as occupied. While growing impatient on #1 I came across this one bid low and got it. I won the bid at $101,320. It's only a 2/1.5 but the purchase price was too good to pass on and I won the bid. This one however was truly occupied. I won the bid in Sept. 2015 and the closing was delayed (again a number of extesions) until Feb 2016. I tried cash for j\keys to no avail. I had to file for writ of possession, hire an attorney and go through the long process of evicting the former owner. Long story short, i moved them out Sept 30th 2016. I'm just finishing up the rehab with plans to list it just after the new year. If my prediction of the market is correct I should net $100k-$130k on this house after expenses.
So, this is my experience with Auction.com. Long delayed closing after winning the bids. What's not included in the profits above is the opportunity costs in tying up funds for such long times. This might be viewed as crazy by some, but for me with having other work as a contractor, managing my rental properties coupled with the profits, I feel it was worth the pain.
I'm interested to know of others experience with Auction.com specifically on "occupied" properties.
Dave, your experience sounds similar to mine. Property listed as occupied, but was not, just horded. It only took 6 weeks to close, 10 more weeks of work and my clients netted 62K (should close next week for the high 120's) . Not bad for a first flip! I am looking at a few more in the area.
They didn't meet the minimum either. This was the 3rd time it had been up for auction - the computer bid it up in 2.5K chunks. they did have the highest real bid. Auction.com contacted us after the auction ended and wanted to see if they could submit the last offer we had put in. The bank accepted and it closed pretty fast. Closing/title fees were $1,600 on a 35K property.
I'm looking forward to doing this again - hopefully for myself next time!
@Joe Blount Hey Joe, I went ahead and bid on the property that I was interested in, but I didn't get it. I'm still considering auction.com, however I need to get a thorough understanding from an attorney or title agent on what type of risk is involved and I suggest you do the same.
From what I heard you cannot get title insurance on a property purchased through auction but I'm not sure how accurate that is, so that's going to be the first question that I start with.
So if a property is sold through auction and is currently owned by the bank due to foreclosure or some other reason then you can obtain title insurance?
And if its sold through auction due to failure to pay taxes you cannot?
Is the title insurance purchased before you go to bid at the auction as a blanket policy, or once you've won a particular property?
Jean Norton I have the same questions as Danny Carter regarding title because I'm interested in bidding on 2 houses next week. I drove by them, one was a ghost house n u can tell nobody lives there n the other one looks like nobody lived there either but there was a car in the driveway. The other questions I have:
*The $2500 registration fee is refundable for what I understand. Am I correct?
*Also, let's say u win a bid then title is not clear, will all money be reimbursed?
*Lastly, what website would we check in public records for squatters? I'm in NY so the tenants usually have the upper hand
1. Yes, however I recommend you use a credit card. If you use a debit card you will regret it.
2. Yes, absolutely. I won a property at $28k, there was a $1m+ lien on it and they refunded the EMD, NO PROBLEM!
3. Squatters are an issue you can't investigate online. I HAVE gotten out of a deal because of MEAN SQUATTERS, but thats because of my existing relationship with auction dot com.
thanks @Jean Norton I noticed there's a lien/judgement on the property I wanted to put an offer on ($16500) from the town. Will this be mine or they'll pay it at closing
@Maria Marrero - if it has already been through the initial foreclosure process (meaning in the category of "Bank Owned or Newly Foreclosed"), then yes, you can ask for clear title and a special warrantee deed. If it's advertised as a Foreclosure, then it's still owned by the borrower and facing foreclosure at the courthouse steps. That means the government lien will carry with the land, meaning you will be responsible. However, remember that sometimes the city will negotiate with you by reducing penalties, etc. But buyer beware.
Your welcome @James Caruso. I'll setup a call within the next week or 2 to cover a lot of these questions and answers.
Question. I will be attending my first courthouse steps foreclosure auction. Upon doing my due diligence, I discovered that one of the properties I'm interested in shows to have a Notice of Federal Tax Lien issued to the previous owner in 2014 totaling over $70k. In 2015 the mortgage was sold from one company to another. Should this tax lien have been taken care of when the mortgage was sold? Can I purchase title insurance for properties sold at the courthouse to protect me just in case this lien is still pending?
@Jean Norton Thank you for all the information you have previously posted.
Steve. Title insurance doe Not cover any kind of preexisting lien. However, IRS liens expire 120 days after the auction, but they have the right to redeem, pay you back your purchase price, but it is rare.
If you read the Auction.com terms and conditions they allow sellers to put in bids on their own properties to try to inflate the auction price. It is a buyer beware site.
I just looked at the Auction.com website, Under their "foreclosure" category, property has very limited information.... What kind of due diligence should i do if I am interested in a property? thanks
Count me in @Jean Norton. I just won the bid on a house 2 weeks ago, now I am just waiting for the title company to obtain the recorded foreclosure deed so we can proceed with closing.