The Bank Owned Foreclosure Auction Game And How It’s Played – Part 2
Yesterday, I introduced the fact that there’s going to be 2 big auctions coming up of bank owned foreclosure homes. Most likely, there will be more of them further out.
If you’ve dreamed of scoring a deal or 2 or 3 and making some money in the future from the “Foreclosure Problem”, this is an excellent opportunity. However, you’re going to have to put some money, time, energy and thought into the process. And you’re probably going to have to put some paint, and landscaping and who knows what else into the home if you’re the successful bidder. Huge Profits in the future will require investing time, money and energy now.
Here’s how to play the game. (It’s eerily similar to the normal home buying process)
First: You’re going to need to know yourself, and the limits of your money, time and energy. You need to know what your goal is. Are you going to try to “flip” the house? Are you going to rent it? Are you going to live in it? Are you going to narrow down the homes to just ones that need no work? a little work? a whole rehab? Are you going to do the work yourself? Do you know contractors, painters, handymen etc. to do it for you?
The best way succeed in step one is to sit down with me and have a consultation. Let me ask you the right questions, so that we’re working only with the right answers. Those answers will determine your success or your failure, or whether you even want to move to step 2 at all.
Second: You’re going to have scour the list for homes that seem to meet your criteria. You’ll have to narrow it down by zip codes or areas. By size and shape style and amenities for your goals. For example, I don’t recommend family sized rental homes that have swimming pools. I don’t recommend properties on the other side of town from where you live.
Third: You’re going to have to devote at least one day to PREVIEWING the homes that you’ve put on your MEDIUM LIST. You should narrow the list to the 10 homes that you’re going to preview. When you’ve seen ALL 10, you need to whittle it down to the 3, 4, or 5 at most for the SHORT LIST that you’re going to be willing to bid on. All homes will be open the weekend or 2 before the auction, and most of them I will have access to during the week.
Fourth: You’re going to need to do the homework for EVERY property on the short list. What was it worth in 2005? What will it cost to get it livable, rentable or salable? How much does the bank have into it? WHAT’S THE MAXIMUM YOU’RE GOING TO BE WILLING TO PAY FOR IT? We’ll need to run comparables, search the tax records, calculate the repairs if any. We’ll figure out what it will rent for, and what the costs to purchase and to carry it. MY JOB IS TO HELP YOU FIGURE ALL THAT OUT.
Fifth: (which should probably be 2nd) The very MINUTE you’ve decided you’re going to try to play this game, YOU NEED TO TALK TO YOUR LENDER (or have me refer you to one) AND GET YOUR FINANCING IN ORDER. You’ll only have 30 Days to close on the purchase. Your winning bid will NOT BE CONTINGENT ON YOUR ABILITY TO GET FINANCING. You’d better know up front, and very early in the process if you’re bankable.
Sixth: On the day of the auction, you’re going to spend the whole day watching and learning from the homes that come to bid before they get around to the ones on your short list. You’re going to bid on the first one on your list that comes up for auction AS IF IT WAS THE ONLY ONE ON YOUR LIST. If you’re going to get one on your list, it shouldn’t matter to you which one you get. If you get the first one, and you’re only buying one, then you’re done! If you don’t get it, then follow the same strategy for your second one, and then the 3rd one, etc.
UNDER NO CIRCUMSTANCE SHOULD YOU BID ON ANY PROPERTY THAT YOU’VE NOT TAKEN THRU ALL OF THESE STEPS. Adrenalin fueled mistakes can turn a potential win into a probable loss.
Seventh: If you’re the winning bidder on a property, you’re going to give them the earnest money check that you brought with you. You’re going to sign a purchase contract. Then we’re going to go thru all the normal steps of an escrow during the next 30 days. As your agent, I’ll be supervising and co-ordinating all the different steps.
Eighth: You’ll finish the day with a real bargain, or a real lesson in real estate investing.
If you don’t get a property at the auction, you’ll have a terrific idea of what to do the next time an auction comes up, or you’ll be set up to actually try for one of the thousands of bank owned properties that aren’t in auction. You know the ones I mean. There’s probably 1 or 2 of them on your own street or block.
All you have to do is invest some time and energy to get your ducks in a row, and then test your luck against a whole lot of others who are doing the same thing.
To get started, call me at 702–378–7055 to schedule an appointment for us to consult with you, and tell you some more of the fine points. There’s no cost or obligation to sit down with me. I’ll even buy the coffee.
Here’s the links to the Auction Websites, where you’ll find the rules, schedules and properties
The Hudson and Marshall Auction Will be held on December 2, 2007
The Hudson Marshall Auction will be held at the Ritz Carlton at Lake Las Vegas. Auction starts at 12 noon.
There are 333 properties to be auctioned. Hudson and Marshall will look at offers prior to the auction, and if they accept one, the property will be removed from the auction list. Almost all of the properties will be open for viewing on Saturday and Sunday 11/24 and 11/25 from 1 to 3 pm and most of them are on lockbox and I have access to show them to you at other times.
The Real Estate Disposition Corporation Auction Will Be Held On December 8 and 9, 2007
This Auction is so Big, with over 500 properties that it has been divided into 2 days/groups:
ALL HOMES OPEN FOR INSPECTION from 10AM to 5PM on 11/25/07, 12/01/07 and 12/02/07 and most of them are on lockbox and I have access to show them to you at other times.
The rules for them are similar, but slightly different, and you have to read them, and follow them closely. Give me a call at 378–7055 and let’s see if a little bargain hunting might create a big bump in your net worth.