REO Auctions

My wife, son and I went to the auction this morning. I want to jump ahead, but let's back up a little. In the past two weeks, I have been comping a list of REO homes that were going to be auctioned off this weekend. I spent several evenings comparing comps and determining property values. My wife and I also visited about twenty of the homes that we were interested in. We made notes of necessary repairs and observations of the neighborhoods. I spent two late nights calculating maximum bids for seven homes, by deducting costs and figuring about 30% profit if sold at ARV (after repair value). At the auction, it took about an hour before we got to our first property. In that time, I was noticing that buyers were getting some great buys. Our first property went for $15K over my limit, so I never got to bid. The second property started fast, and I thought it was also going to go too high. The bidding stalled at $100K. I had calculated a maximum bid of $113K. I bid $105K and won the bid. When we went to do the paperwork, I found that we had not met the reserve, but the seller would make a decision and let us know within a week. I asked if I could forfiet that property, and bid on others. They said that I could not do that. I could back out of this deal, but they would not allow me to purchase another at this auction. We were then told that we were $5000 short of the reserve. We talked it over, and decided to go ahead and pay the $110K. This is my first deal since reading Dean's book, and I have a potential profit of $60K.

Al

Sounds like you had an exciting day! Man, a person sure learns something new with each experience. That's neat that you and your wife and son got to share it together. And now on your way to $60,000 bucks!

very happy for you,

Rina

This morning I was notified by the Title Company that the new deed was filed. After two and a half months of dealing with lenders and the bank (seller) we took possession of the home. I have had a verbal agreement with a buyer for over a month and a half. I meet with them on Saterday to be sure we still had a deal. I will have a lease purchase agreement for $165K purchase price with 3% appreciation per year, prorated to the month of purchase. My purchase price was $110K. I have $122K in total costs, including the repairs I agreed to make. The Leasee (a carpenter and sheetrocker) will make most of the repairs (approx $5000) in place of an option fee. I will have a positive cash flow of about $250 per month. Now I want to refy to get my down payment money back.

Al

Way to go Al! What a great deal, thanks for sharing your story! You really inspire me and I'm sure the rest of the DG family. Congratulations!

Dawn

Pulled this back up to the top because of some interest

Al

That's even better than a link.

Any update on yours? (Congrats again)

Rina

Rina wrote:

That's even better than a link.

Any update on yours? (Congrats again)

Rina

My property has a lease option with a positive cash flow of just under $300, and should sell in 18 months for a $41k profit.

Al

alchristmann wrote:

Rina wrote:

That's even better than a link.

Any update on yours? (Congrats again)

Rina

My property has a lease option with a positive cash flow of just under $300, and should sell in 18 months for a $41k profit.

Al

Can you give us more info on the cash out refi?? What was the LTV??

And how did you find your buyer??

I wish that were the story. I had to take conventional loan (20% down). I will be refinancing after six months seasoning. I believe I can get 80% LTV. Property appraised at $180K at closing in November. I have it contracted at $165K and have $124K into it. The buyer just showed up one day while I was working on the house. The one he was renting at the time (next door) was being forclosed on.

Al

A great place for potential good buys but do your homework.

see if you can talk to the bank just before the sale. Occasionly you can find a terrific buy.

thats a great idea to talk to the lenders to put in your own offer(max bid.)before the auction even takes place. Thanks Joertle.

I believe all the properties that were on the auction were listed by a Realtor. I don't know if you could make a deal with the lender and exclude the Realtor. But making an offer through the Realtor just before the Auction may be a good approach. If the property sells at auction, the lender would be paying both the agent and the auction company.

Al

I so wanted to check out this type of auction but wanted some feedback before I went. This helps a lot guys thanks.

Fist thank you for the information on Autions. Have you made any recent aution purchaces and how about online bids?