Foreclosure Steps Demystified

Almost all new investors begin by checking out the trustee's auction.  The success stories from investors are huge from the auction steps and the word has spread.  If you want a way of making a huge ROI quickly, then check out the Trustee's Auction.

The Trustees Auction  is pretty straight forward and simple as can be.  However you are swimming with sharks.  Not only swimming with them but literally surrounded by them.  All it takes is a slip of an address and you got trouble.

 I have been to a few different auctions in a few different states and so far  I love the Sacramento Auction the best.  The auctioneers are serious and move quickly.  No time for chit chatting here.  Miss the address called and its too late, its gone.  I have been on the winning side of that before and therefore appreciate the speed at which things happen.  Fortunately not all investors are comfortable with this style.

Why is investing in Trustee's Sale properties so difficult?

In a word the answer would be time.

There is just not enough time for most investors to do the due diligence necessary in order to make a purchase.  This is where the rookies get into trouble.  Beginning Investors often try to shortcut the process in an effort to make up time and that is a recipe for disaster.   Instead try working out the kinks before actually investing money.

Often many investors are tracking the wrong properties and using bad data.  Reliance on third party websites can be a huge problem.  However if used properly they can be a lifesaver.  So learning which  sites to use and which ones not to use is helpful. 

Most investors who purchase properties at the Sacramento Foreclosure Auction use a third party service.  The main service is called Foreclosure Radar.  This is software that tracks all properties that are coming up for auction that day and in the future.  It also keeps track of past sales, transfers and postponed properties.  In a nutshell its the ultimate database for farming future deals.

Each day investors come to the auction with foreclosure tracking sheets in hand provided via. Foreclosure Radar.  The investors cross off properties they don't get and keep track of what they sold for etc.  How this information is used for other investor I have no idea.  However I see many investors keep it.  One guess is to track competitor price points to help identify wholesale opportunities.

I find the key to foreclosure radar is to use it in conjunction with the MLS.  I suggest using Foreclosure Radar to help identify properties and then comp the properties using the MLS.  It;s not a smart idea to trust any third party ARV (After Repair Value) service.  This is your money and thus you should know how to comp your own properties.  Trusting a 3rd party at this point is financial suicide.

Once you have found your property and figured out the ARV what now??  Well it sure would help if the property was stills standing wouldn't it? This is where the rubber meets the road, literally.  It's vital you get eyes on the property. 

 Now it's time to get driving properties.  Yep you heard it, time to get driving to that property.  If you can't do it then you better have someone you trust because nothing sucks worse then buying a house today that burned down yesterday.  Having a visual inspection of the property is a vital part of the process.  Honestly I use this part of the process heavily to determine my construction costs.

 I rely on drivers a ton.  However since I used to drive myself I know how to train them and thus have made my life easier.  I have already made mistakes and can thus pass down a bit of wisdom to help them avoid making some of the big ones. 

 Imagine purchasing the wrong house.  I've seen it happen.  Imagine passing that news on to the investors.  If your driver gets East vs West mixed up on an address it can happen.  Insist on GPS.

Ok so you drive to the property and now what?  Well hopefully you were paying attention to the neighborhood on the drive in.  Regardless of if the property is occupied or not its important to take a picture showing the front of the house.  Knowing the actual condition of the property is vital and the determining factor is occupancy.

 If the property is currently occupied regardless of if tenant or homeowner it can make an inspection a bit tricky.  It's important to develop a rapport with the person when initially doing a door knock.  Yep you actually have to knock on the door!

Whats Next?  Well let's remember that all the above happens inside an hour.  So as you can see the beginning difficulty most investors face here is TIME.  It is often for his reason many beginning investors start with REO investing versus Foreclosure Auction Investing.

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