I’m preparing to get my feet wet and buy my first property at auction. I’m not a pro, work alone, and I’ve been doing a ton of research, watching and learning, tracking sales, and watching properties that went across the auction reappear on MLS.
So far I’ve been able to answer most of my own questions (thanks Sean for the forums and great site!). I’ve got a question about financing, so here goes:
I know that at auction you pay with cash or cashier’s checks, that’s not what I’m asking. Once the property is yours and you go list it on MLS, say within a month, I’ve heard of lenders refusing to write loans for buyers even if it appraises right, because they see the huge difference between the flip price and the sale price. My friend who is a mortgage broker also said that FHA or Fannie/Freddie have specific requirements of up to 6 months before they will write a loan on an auction property. He said the same applies for a property that I bought cash, and now want to keep (to live in or rent) but refinance myself so I can get the cash out and buy my next property.
So… I see the pros buying multiple properties a day. Are they buying properties cheap enough where their potential buyers (after the flip) are able to buy cash from them? There’s got to be something I’m missing.