All Forum Posts by: Sean OToole

Welcome @Lance Kamiyama. I highly recommend doing your first deal close to home. CA is a tough market as prices tend to be higher and ROI's lower, but there are likely properties that will work for you within an hour drive. Working remotely across the country either requires putting a lot of trust into someone else or a lot of travel (which eats into ROI pretty quick).

@Christine Kankowski thanks for mentioning us, but we actually don't do the pre-nod lists. That is credit data, and while it is available from the credit bureaus for certain purposes, and we could resell it, we have decided not to. Problem is that it comes with a list of rules, that, if followed, make it almost useless (FCRA stuff that @Tae Seung Kim found mention of on the yellow letters site).

There are some unscrupulous lead sellers that sell those "pre-nod" leads without warning their clients of the FCRA rules, and I'm sure many have used them without following the rules and without getting caught. That said, I strongly recommend against doing that. In this new world of CFPB oversight, you really want to be careful when messing with federal regulations.

Finally, having spoken to investors who have used those leads, it seems their results are worse then those who start later in the process (at nod, or even nts) - even when they don't follow the rules.

There is a common misconception that being first to talk to an owner is best. But that is usually when the owner is still the most in denial about their situation, and least willing to take action. True motivation to sell comes later. For example, look at the person at the end of the process whose bank just got an order for relief from stay on a bankruptcy freeing the bank to complete the foreclosure. They are completely out of options, and all those offers to buy their home stopped coming months or even years ago.

The answer won't be the same for everyone, as it depends on three things:

1. Your state

2. Your county assessor

3. How important know the value is to you.

Some states like CA, limit the increase in assessed value each year to a certain percentage. For those states assessed value really doesn't work at all if you need an estimate of current value.

At the assessor level, if they are doing their job the assessed value and the "current value" should be very close. Some assessors are prone to over-assess, others perhaps under. Regardless assessed value is updated once a year, whereas current value is updated monthly. If the assessor just updated, or its a slow moving market no worries. If it has been 11 months in a fast moving market, there could be a reasonable difference - though honestly probably within the margin of error of current value anyway.

Finally, do you need to see the value, or are you willing to do comps on the fly as leads contact you. If you don't need to see the value, then know need to include it in the export.

Personally I think now that current values (aka AVMs) are essentially free (thanks to the Zillow Zestimate), its ridiculous that they charge so much for them. Other services, like mine, include them for free, but unfortunately none that I know of in your area (yet).

 @Jeff Fairchild - it will depend on your state, and county. It would absolutely not work in California where Prop13 can keep assessed values well below market value (limits increases in assessed value to 2% per year). Also depends on the county, and how good they are at determining market value when they set assessed value. Finally "Current Value" which is an AVM (automated valuation model - think Zillow Zestimate), is updated monthly, whereas assessed values are updated annually. 

If it is a sheriff or trustee sale you are breaking the law by simply agreeing not to bid. At least out west the FBI and the US AG's office has been very active the last few years prosecuting "collusion" on the courthouse steps. They are being prosecuted under federal bid rigging laws, so this applies everywhere in the U.S.

For those who think "partnering" on a sheriff or trustee sale is the answer, you should know there is case law, at least in CA, that makes it pretty clear that if the partnership isn't a real, long term, partnership with division of duties and responsibilities, and is instead for a particular deal it's likely collusion. Results in that case were absolutely disastrous for the investors.

As such my suggestion is to just compete. It is super hard to stand around the courthouse steps every day and not make friends with the other bidders. But at the end of the day you really should just bid to your number and compete - it's not hard, athletes compete with their friends all the time. ;-)

Hi Kevin,

Arizona is one of the better states for buying at trustee sale. A few key reasons: 1) they require the opening bid to be posted before the sale, 2) postponements are limited by statute (though definitely still happen), and 3) you only have to bring $10k, not the full amount when you buy, though the rest is due the next day. You'll lose the $10k if you get cold feet, but that is still a lot better then other states.

When buying at auction, there are a few key differences vs. a traditional sale: 1) you won't get title insurance, 2) no inspections, 3) can't get a traditional loan, though if you've got the $10k you might find a hard money lender that can get you the rest by the next day, 4) if anyone is in the home you'll have to evict them. For taking on these risks, you should expect some discount from "market" value. How much of a discount will depend on the property, who else wants, and where the bank opens the bidding at.

The item above that is most likely to get you in trouble is the "no title insurance", and this is where you'll want to focus most of your energy if you've already seen the house, and have the cash. When a loan is foreclosed on, it "wipes out" junior liens from encumbering the property, with some exceptions like the IRS's redemption period. However, you will still need to pay any senior liens, past due property taxes being the obvious one. So if you are bidding on a first mortgage, you really need to make sure it is truly the first, and you need to find the past due property tax amount. If you are bidding on a second, then you'll also want to find the balance of the first mortgage. That is a way too simple overview, but hopefully you get the idea. If you have a good title co relationship, they may be willing to help you with this.

I also personally think it is worth reading the state law before you bid for the first time. That will make you more knowledgable (in that aspect at least) then most. See: http://www.azleg.gov/ArizonaRevisedStatutes.asp?Ti... and scroll down to section 6.1 Deeds of Trust, and specifically 33-807 through 33-814 (not the mortgage / foreclosure section, mortgages are rarely used in AZ, even though most of us mistakenly call deeds of trust "mortgages").

Here is a summary of the process I wrote a while back: https://support.propertyradar.com/hc/en-us/article..., but note I haven't updated the statute excerpts there in a while so go to the link above instead to read the actual codes.

I purchased about 150 properties at trustee sale. It is personally my favorite way to buy distressed real estate, though I'm sure others feel differently. :-)

I think the key difference is that while those companies sell lists based on the same data, it should rarely be the "same list". List services work despite multiple users, because each user can modify the criteria to their specific needs. So, at least in theory, every list should be unique. 

Two thoughts:

1. The assessor data on which Listsource and other list services like ours are based can be messy - and I find unit count to be particularly troublesome. Really varies a lot by county, and even by age of the property within the county. Adding a property type filter is probably the easiest way to fix the problem you ran into, and that field is far more consistent (though not perfect). In some counties using bedrooms can actually help on apartments - but agains it varies. This is one of the things I really don't like about Listsource, you have to commit to a list and purchase it before you can view it and find the problems. There are alternatives. 

2. While debatable, you might also want to add some basic qualifications to your letter to explain what you are looking for. Some prefer not to, because you never know what might end up a deal. But if you are going to do letters (which allow more text than a postcard) it's worth considering / testing.

@Account Closed if myself or my team can do anything to help, please don't hesitate to reach out.

I'm not aware of any list company that takes involuntary liens into account when calculating equity. It is very difficult to do on a reliable basis because involuntary liens are against the person and not the property, even though they can block the sale of the property unless taken care of. Involuntary liens include: state and IRS tax liens, judgements, mechanics liens, etc.