I used to buy some Trustee Sale properties back in the mid 1990’s with good success. I am planning on getting back into that phase of the business again… Unlike the mid 1990’s, many of the Trustee Sales today have no equity on paper… but some of the Banks are creating equity 5 minutes before the Trustee Sale by dropping the opening Bid substantially (in some cases)… Do you have any suggestions as to how to manage that… in other words, would one try to attend all auctions, including ones with No Equity, and then hope that a certain percentage of the Banks will drop the opening bid just before the Auction… or is there some more efficient way to go about tracking such a potential opportunity as this ??
This is one of the primary issues auction investors face today. Too many properties to research everything, but no idea which ones will discount sufficiently to figure out which ones are best to track. A couple of suggestions:
Specialize in an area or property type such that you can literally look at everything in that location, or of that type. This way you’ll be ready for any last minute drop bids.
Use ForeclosureRadar.com to track the discounts lenders typically apply, by lender. Focus on those lenders that tend to discount most aggressively. This requires ongoing monitoring as lender procedures change all the time.
I am still new at this, having purchased only 3 houses at auction to date. Before I bought my first house, I spent several days at the auction watching. It was clear there were a handful of buyers who were there everyday and frequently bid against each other. I watched what they bought, actually drove by some of the purchases and concluded they knew what they were doing. The 2nd house I purchased popped up on Foreclosure Radar one morning for a huge discount. I immediately drove to the property, looked at it, went the county, looked at the records. It looked pretty good, but there were some liens on the title that made me nervous. So, I decided I would wait and see who bid on the property and if it was the regulars, I would follow their lead. I won the property. We have since fixed it, listed it, we got a full price offer in 3 days, when the deal closes, we will realize a $80K gain. I know this is crazy, but I have been tempted to follow the regulars on properties I have not done my research on.
Hi Richard - be very, very careful with that approach. If the regulars figure out that is your game plan they will suck you into a really big loss at some point. The last thing a regular wants is someone living off their research. Many are willing to risk a $50k loss themselves by bidding on something they know is upside down if they think it will suck you in.
I don’t think I would actually do it. But I do learn from them. I am learning they all seem to have niches, and I am finding mine. I don’t have enough money to play at a level that will be a threat to them. I am waiting for the cold rainy days of winter when some of these short sales fail and a steady trickle of opportunities come up for sale. I also can see that these guys buy to turn over very quickly, so they are following the season. So far so good, I have survived the 1st few buys with only a few scares. God is looking out for me.
Congrats - sounds like you are well on your way to becoming a pro yourself!
Hi, Richard I am new in the trustee sale, actually still learning. In this article, you said that you check the title search, you only go to county? Do you pay the title company do the title search? I love to hear your story on trustee sale, any idea or suggestion. Please give me a reply , thanks.
Becuase we never know in advance when the house will be auctioned and what the price will be, you wil find that you have to track several houses to be prepared to bid on one that is attractive. I am not sure what the going rate for a prelim is, but I would guess from $200 to $400 per property. So, if you are looking at 10 houses, the prelims will cost a lot. And, I have missed houses that came up on the radar the morning of the auction where I did the title search at the county, walked out the door of the recorder’s office and bought the house an hour later. So, I am doing what I can to learn how to do it. So far so good, 3 houses and no big mistakes.