Foreclosure Auction in a Partnership Scenario

Jamie Parker · 2026-11-01T09:59:24-08:00

https://jpc-tn.comI have typically looked to source property at a cash value. 70%, 65%, 50% ARV - minus repairs. Not being extremely effective with off market deals, I purchased my first Fix and Flip from the MLS. Now I have been approached by an investor the wants to buy from Foreclosure Auction.The AskOn homes worth around 150-250kRaise capital from Private Lenders [25k-50k]Give Lenders $3500 up frontPerform Title Search on propertiesBid on propertiesSell to Investors and/or Fix and Flip PropertyRinse and RepeatI have a meeting tomorrow with a private Lender and wanted to get some insight on this as a scenario. Has anyone purchased from Foreclosure Auction and have had any success with the properties after purchasing.My ideal is to analyze the property for the worst case possible cosmetically. Then drive by and check for windows, roof, and assume A/C and Water Heater Replacement. If we close on the property and any of these items are 5 years old or less then we treat it as a bonus.Anyone have any insights on this type of strategy or has had any success with Foreclosure Auction.

Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

1w

Homes in that price point are very competitive. Where we have seen people get the best bang for their buck is on properties between 500,000 and 700,000, or slightly higher depending on location. Those that are slightly above what I would call middle class, but not luxury, have shown potential for people with the best spreads because the home condition is typically slightly better. On those lower-priced homes, it is very competitive, so there are a lot of people chasing and running the numbers up, which can lead to overpaying.

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Jamie Parker
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Real Estate Investor · Memphis, TN · Member since 2016 · 447 posts · 147 votes
1w
Thats a fair assessment. The Investor that approached me about this scenario is a licensed Mortgage broker and RE Agent. Where he would like to provide the backend sale of a loan to a owner occupant, Im slightly curious why am I approached about this investment strategy. On part of the process I like is conducting the title search prior to bidding. As you point out, If you are outbid and dont secure a property at auction, that turns into a lot of capital being wasted during due diligence with the hopes of securing a deal.
I put in an offer on a 700+ ARV home in my market from a wholesaler. The property is in an affluent area and has a pool. 100k in rehab on a deal increase the risk because of time to rehab is substantially longer. Do you think adding a pool makes the deal more risking in this price point?
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Eric Kleinsasser

Specialist · PA · Member since 2026 · 47 posts · 10 votes

1w

On the auction side, One thing I'd pin down before your lender meeting is the cost of the deals you don't win. Title searches and drive-bys cost money on every property, and at auction you might win one out of several. Ask who pays for that work on the misses, and what happens to the $3,500 up front to lenders if nothing gets bought for a while. I'd also write the whole plan out per property: title search cost, max bid, repair assumptions, each lender's money in and what each lender gets back. Most auctions want payment fast and you usually can't get inside before you bid, so assuming the worst on repairs is the right instinct. On the pool, I'd ask your agent how many recent nearby sales had pools and whether they sold faster or slower. Give the pool its own line in the rehab budget, because you can't really tell its condition until it's opened up and running. Who would hold title on the auction deals, you or the investor?

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Redgy Saint-Germain

Developer · Boston, MA · Member since 2017 · 261 posts · 138 votes

1w

Jamie, Chris and Eric covered the money side well, so I'll add the stuff that bites on distressed buys.

At auction, assume you're buying blind and maybe occupied. Budget time and money to get occupants out, whether that's cash for keys or a formal eviction, and add those months to your carry before you set a max bid. The title search is the most important piece of the plan. You're checking which liens survive the sale, like a senior mortgage if a second lien is the one foreclosing, unpaid taxes, and city liens or code fines. One missed lien can wipe out the spread.

On the lenders, I'd be careful paying $3,500 up front whether or not anything gets bought. I'd rather pay a solid return on deals that actually fund, with the money committed and ready to wire, since auctions usually want payment fast. Also ask who sets the max bid. If it's your partner, get that number in writing per property before auction day.

On the pool, in an affluent area it's often expected, so check how many recent comps had one. The real risk is condition and time. Have a pool company look at it before you close if you can, and give equipment and resurfacing their own line in the budget. With $100k of rehab, I'd pad the timeline too.

Redgy

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Foreclosure Auction in a Partnership Scenario

Foreclosure Auction in a Partnership Scenario

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