I have attended a few trustee auctions for homes in foreclosure. I must say it was real interesting to observe the process and witness the actual sales taking place. To my surprise, I would say maybe 10 of the 100 properties to be auctioned were bid on. Of those 10, maybe 3 or 4 received multiple bids. Most of the homes were sent back to the bank to start the REO process.
I did see quite a few good deals passed up as well as a few real good deals get bid on and won by a bidder present at the auction. I took notes and drove by a few of the more desirable properties to see just what they were. Well the best one, in my opinion was in the Arrowhead area in Glendale. I ran some comps and per my numbers this home was picked up for approximately 72% of the current market value of 300,000. The home was in good shape from what I could tell of the outside. It looked vacant with minor TLC needed to increase the curb appeal. This home is in a hot area and will sell fast if priced right and cleaned up. It was the one property I wanted to bid on just because I know the Arrowhead area and know how the properties priced right there, sell quickly.
Another home that was probably the second best win was in Peoria. This home was a little more expensive but had a higher value as well. This hom,e was worth about $320k and sold for about 70% market value. Another hot property to pick up, do some minor repairs and list. This would sell in less than 30 days if priced right and would net a nice little profit.
During my time at these auctions I noticed several companies and investors who are always there. Some are buying for themselves and others are buying for another party. This is becoming a nice way to earn some extra cash by finding, bidding and being the highest bidder, doing minor repairs and selling for a profit.
One of the investors I was took the auction did end up winning a nice property. Once you are the winning bidder, you must put $10,000 certified funds down that is non refundable. The balance is due by 5P.M. the following day. Make sure you do the proper research to make certain you are getting what you are bidding on. Make sure the property did not burn down and there is still a structure standing. Make sure you are not bidding on a second or junior lien. Make sure you do your research to be certain you are getting what you are buying and nothing less.
I did speak to another investor who was there every time I went. He told me a story of an individual who was going there to buy properties but was not doing his research. He had planned to bid on one particular property at each of his 3 times in the auction. Each of these 3 times, this gentleman whom I spoke with, helped him out and found out he was interested in a second mortgage. Finally the fourth time, even after knowing he almost wasted $10,000 3 times, he persisted to bid on a second mortgage and lost his 10k. As we all know, second mortgages are not bringing much in this market and you are just setting yourself up for an expensive mistake.
Auctions can be a good source of income but they are quite risky. Trustee auctions are even more risky than the bigger advertised auctions whe you can preview these homes before bidding. One is more secure and safe but brings more bidders and higher prices, the other is more risky unless you do you research but has fewer bidders and lower prices.
None the less, I found my trips to be quite informative and helpful to both me and the investor I took to purchase one of these homes.
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