Changes in how to buy in the phoenix
Part 2 Auctions.
Auctions can be a very good source for buying discounted properties. How ever it comes with many challenges. There are several types of auctions as well as several ways to buy auction properties. Let’s take a closer look at how to buy at auctions.
First let’s look at the two basic types of auctions. There are the Trustee sale auctions and the Privet auction house auctions. The Trustee sales are the most common and are the one that most people think of when thinking “Auctions’ that’s when a lender has repossessed a property and is running it through the sale to recover the loss for the first time. Many times the lender will not discount the note at the auction; therefore the minimum bid is what is owed to the lender. Sometimes the lender will go through the process of finding out the current market value of the property and start the minimum bid just below there. And of course there are properties that the lender just want to get ride of and discounts the property heavily and that’s where you will find a deal. It’s important to know that a very high percentage of the properties that are listed to be sold at auction never make it to the auction. This is for a verity of reasons barrower brought the loan current, second lien holder brought the loan current, the property was sold, loan modification was reached just to name a few reasons.
It’s also important that you know that most lender auctions are done at one of two places, the court house, or the trustee’s office. There are hundreds of trustee’s that perform trustee sales and knowing who and witch ones can be a challenge. Trustees can offer lists as well as witch properties have been canceled or postponed. However now a days with all the foreclosures many trustees have a website and it’s now a self service program, and that can be confusing.
Privet auction houses are privately owned business that silliest all types of owners to let them auction there properties off. If you are a seasoned investor and have had several properties listed on the MLS you may have been approached by one of theses auction houses. One of the conditions that a privet auction house has is that no other form of advertising can be done prior the there auction. Many of theses properties are removed from the MLS prior to the auction then if they don’t sell at the auction they are put right back on the MLS. Most of theses auctions are held in hotel conference rooms, or other convention type areas. These are usually heavily advertised on television and radio. Many of the minimum bids are the list price on the MLS from the week before.
There are some conditions to buying at auctions that will make a difference.
First most will require at cashiers check for as much as $10,000.00 to even bid. If you are the winning bidder you will use it as earnest money. Second you will be required to pay in full with in a very short amount of time usually 24 hours. Point is there are no escrows on auction properties, they are all cash purchases. Most of the time you will not have access to the inside of the property so do your due diligence.
Finally, understanding the auction process can be a challenge. Have these three things in mind when considering auction properties.
1) Do your due diligence on the auction house.
2) Do your due diligence on the property.
3) Have cash and be ready to go.
Happy Investing
Chris Bianco
Valleywide foreclosures.
