First Foreclosure Auction

Be very careful not to get swept away at auctions. Most bids that are won are usually rejected and sent back to the auction block. You might think that great deals are being made, but the devil is in the details. Banks are behind this sinister way of selling properties. You see, all those properties at auctions are bank owned (REO). Banks place a minimum reserve amount on each property, usually no more than 10-15% off FMV, and that's only because it's probably in need of major repairs. When the winning bid is presented to them they can reject it without recourse because it did not meet their reserve amount. The unsuspecting bidder thinks he won and goes home with a wide smile, only to get a call the next day informing them of the rejection. The naive observer starts to salivate at all the great deals and wants in on the action.

By the way, those who actual buy at auctions, well they pay almost what the FMV on the property is. They do not get deals. Banks say yes only to the ones that meet their reserve. No reason for banks to give away things that they will lose money on.

We always hear that banks are not in the property management business, but think about, banks are also not in the money losing business either. They employ the best and brightest MBAs to make them money, not give it away at some loud-mouth-carnaval-style auction.

Auctions are nothing more than hype!

Congratulations on taking the first step in learning about real estate investing.

Hello Joe,

I'm in the Army as well...I've never been to a foreclosure auction before, but I do have an intrest to go one day. Do your homework on finding funding, keep at it and good luck.

" Goals help you channel your energy into action "

Les Brown

Hello Joe,

I'm in the Army as well...I've never been to a foreclosure auction before, but I do have an intrest to go one day. Do your homework on finding funding, keep at it and good luck.

" Goals help you channel your energy into action "

Les Brown

I went to an auction too and heard the ol reserve story

wonder why the banks would waste more time with this than they already have with their over priced listings

another reason to hate banks

later

Thank you I appreicate the advice.

Thank you

I am attending an auction on Saturday, March 20th. I agree with fredewillet as to why the banks would waste more than they have to on REO's.

Thanks for the posting, I will report back on my experience.

Peace and Blessings,

Going to my first auction on Thursday, 3-18-10. Put in a written offer today on a foreclosure and my agent called me later and told me that he'd been informed that I'd have to go to the auction and bid on the house. I'll go, but just to observe one. I'll echo my sentiments and observations afterwards.

EHCO

you can surly make it here too!...& buy the way "Thank You! & all who serve." I would just sugesst that auctions are different all over the place, many factors go into what affects prices of any given area so just don't be discouraged for trying to get your feet wet here. If you think you can you will! If it took you 50 offers to get a deal done.... you still got a deal done!

I attend county public trustee auctions in Colorado.
I get information on the houses to be auctioned 1 to 3 days ahead of time. The bank does set a minimum bid amount. This is how much their cost was to foreclose on the house. As an example, some person owed $70,000 and was foreclosed on. The bank will set the minimum bid at $70,000. The house is worth $150,000. Through your research you find this out and notify the trustee you will be bidding on this property. I have seen houses purchased for 50% of ARV at the auction. You don't want to bid on a house that was foreclosed on for $150,000 that is worth $140,000, that one will go back to the lender and become an REO. At the public trustee auction the properties are not officially an REO until after the auction. This is a great way to pick up discounted properties, It takes alot of research, patience and cash on the spot.

Good luck to All!!
Michael Mangham
MD Home Acquisitions LLC

I will be attending my first auction this coming week-end just for the experience, and hopefully to expand my buyers list. I've also been informed it depends on whose auction you are attending how they work it.

Today I looked at 5 properties in my neighborhood that will be on the auction block. During the week I will do my homework, research comps and if I had the cash, what would be my highest bid on the house? Then I will go to observe. A few weeks down the line I can keep track of these houses and see what they actually sold for. I thought that would be a good way to start.

I'm positively sure that they try to get the buying frenzy going by listing the starting bid really low. I mean, REALLY, who wouldn't buy a house for $9,000?!? So I know, these will not actually sell for that and I'm interested in finding out the real deal.

You are right on the low price bidding. My partner Jeremy and I bid on a tax sale house. Owner was back 3k in taxes, We bid $850.00 on the house but lost it to a bidder for $1550.00. These were sealed bids so no way to know if you are high or too low. But, it is just another way to buy up properties. Tax sales are a great way to build your business on...Jan

PS TO JOE-- I am former 18 Bravo.