Foreclosure Auctions on the Courthouse Steps: Can I play?

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Real Estate Agent with RE/MAX Gateway, Reston, Herndon, Ashburn, Sterling, Fairfax

 

foreclosures in Fairfax County

Tom: I was headed home to Greenbriar and cut through the Fairfax County courthouse complex just for grins, and  saw folks gathering in a huddle on the landing at the top of the courthouse steps.

Is that where they have the foreclosure auctions?

Steve: Yes Tom, believe it or not, no matter what the weather the sales will happen.... and it was nasty cold today. The attorney was dressed like a gold miner headed for the Klondike.

In Virginia which is a deed of trust state, the attorney for the trustee shows up at the advertised time and says something to the affect of  "This is the trustees sale being held on behalf of trustee John Jones by the firm of Black and Decker.

I have 5 properties on the list for today and they are as follows...and he reads them off.

There was nothing for sale near Greenbriar today, by the way.

Tom: Can I go there and bid myself?





forclosures in Fairfax county
Steve: Yes Tom but this is a serious business and there is much risk. You really better know home values accurately or you will get toasted....Zillow estimates ain't gonna fly....There are almost no regular folks seeking a bargain on a personal residence there.

Unless you have a lot of real estate experience and money that you can afford to lose, my advice is that you go and watch and possibly try to apprentice yourself or be a helper to some of the people that go there regularly.







foreclosures in Fairfax County

 In our area, you need to show up with around $20,000 in cashiers checks or 10% of
what you plan to bid.
 If you win, you give the money to the attorney right there and have the ability to close the transaction with the rest of the money in 15 days.

There is generally no opportunity to inspect the interior of the properties, since they are occupied by unhappy homeowners who are losing their residences to foreclosure and there are no lock boxes with access to Realtors (at least here there aren't)

Tom: If I can't see the home, how do I know what I should pay for it?










forclosures in Fairfax countySteve: Well Tom, that is the tough part. If you are going to attempt to buy the home, fix it up and sell it quickly (this is called flipping)

You have to evict the people living there, carry the home with utilities, insurance and taxes until you can get it sold and  repair whatever happens to be wrong with it.

Then sell it and still make a profit. Even people who are experienced can take a bad hit.

 That is why you need to study the process and ally yourself  with someone who can teach you ....but you should be prepared to bring some effort to the table to assist whoever is going to be your mentor...provide either money, research or labor. The folks who do this regularly have earned their battle scars and you will have to pay your dues as well, unless you have money to burn and plenty of time to invest.




forclosures in Fairfax county

 There is so much more to say about this that cannot be said here. There are courses
you can buy that give you guidance, or you can do as I suggested and go hang out and watch and build a relationship with someone who can help you learn the process.

You should probably do both ....read all you can and be an apprentice.

It is a tough business but obviously there is opportunity, or no one would do it.

Have fun.





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Anonymous
bob

I purchased a home on the courthouse steps in prince william county va and I only attended that one auction.  It was pretty amazing really.  I was lookiing for houses in this one area of lakeridge for a while and even put a contract down on a regular sale but was outbid.  Then saw the foreclosure on zillo or redfin for a 1 acre house for $40k. I go to the courthouse and there are about twenty people there, all pretty much investors and we waited for the lawyer from the trustees to show up and auction the properties.  Well my property was the first one and the auction was on the 2nd mortgage but if you bought it you'd have to pay the first mortgage off too.  They disclose it at the courthouse and it was $222K.  So I outbid an investor on this property because I really wanted it.  I researched the area and this foreclosure was three houses down from the one I had tried to buy.  Paid 350K.  The other house sold for 450K.  The downpayment (good faith amt) was $5K. It's lesser than normal because they foreclosed on the second and not the first.
There were some things I was not aware of.  I went FHA for financing and FHA req that you have an appraiser inspect the inside of the house.  So I had to talk the old owners into letting him in.  Then when the inspector found problems I needed to get them to let a roofer inspect the roof and I had to make repairs before I could get a loan.  Then the trustees refused to sign the FHA paperwork and threatened me that if I didn't close I could 1) lose my deposit 2) pay costs for re-auctioning 3) pay difference if it sold for less.  Well #3 really worried me as that could be a lot.  But I got the repairs done myself and eventually they signed the FHA hud docs and I got the house.  It's an incredible risk because if the old owners didn't help me I would not have been able to do it.  Closing in 15 days is nearly impossible on a FHA loan.  It all worked out though, I closed in 22 days I was really lucky.  I still haven't moved in yet but hope to soon.

Feb 18, 2010 09:57 AM #1
Rainmaker
754,835
Steve and Jan Bachman
RE/MAX Gateway, Reston, Herndon, Ashburn, Sterling, Fairfax - Herndon, VA
Realtors - Northern Virginia

Bob,

Thanks so much for your comment. I am glad this worked out for you and on your first one too! As you found out, there is tremendous risk in this...not to mention that the moment you win is the moment that property becomes your insurance responsibilty...NOT WHEN YOU CLOSE!

Please stay in touch...my wife and I are happy to be of service and answer any questions within our experience.

Congratulations on this tough win!

Feb 19, 2010 02:46 AM #2
Rainmaker
672,953
Jill Sackler
Broker Associate, Charles Rutenberg Realty Inc. "Said and Done!" - Long Beach, NY
LI South Shore Real Estate - Broker Associate

I'm glad you referenced this article. I've been wanting to know for quite a while now how the auction system works. I understand it can be brutal in New York and I could be "eaten alive." Still, I find it interesting. Glad the guy above wrote of his experience - good and bad.

Oct 31, 2011 02:29 AM #3
Rainmaker
754,835
Steve and Jan Bachman
RE/MAX Gateway, Reston, Herndon, Ashburn, Sterling, Fairfax - Herndon, VA
Realtors - Northern Virginia

New York is a judicial foreclosure state I believe meaning that there are long court actions involved.

Oct 31, 2011 04:59 AM #4
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