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What to expect with a county foreclosure auction?

2,554 Views | 4 Replies | Last: 4 yr ago by Aggie@state.gov
boredatwork08
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AG
Hey folks,

I'm doing some preliminary research on foreclosure auctions and RE investing.

What kind of legwork do you do before attending an auction beyond a drive-by? Title search? Talk to the seller before the auction?

On the day-of, how does the auction usually proceed? Do you show up with the full amount, a deposit, or does that depend on the individual sellers? This will be in Brazos County.
HarleySpoon
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AG
Just keep in mind that the lienholder(s) can bid up to the amount of their lien without being out of pocket any cash. So, they have likely instructed their attorney to bid up to what they perceive is the net realizable value of the collateral and then to stop bidding......unless there is also a meaningful guarantee on a recourse loan.

I've foreclosed on about 60 notes in 17 states in the last ten years.....all of them secured by commercial real estate. I buy non-performing notes from banks and insurance companies. If there is meaningful equity, few borrowers would allow it to come to foreclosure without finding a fire sale buyer. If there isn't meaningful equity, the lienholder(s) aren't going to just let it sell for much less than the net realizable value of the collateral. The only time I've ever had someone an amount greater than my note was when a relative was determined to punish another relative and get their horse farm.

When considering if there is any equity in a property, be sure to get a very recent payoff quote from the lienholder(s) as the foreclosure process can really run up the amount owed by the borrower.....not to mention that the lienholder usually has paid significant past due property taxes that become part of the note's balance.

Generally, if lien holders are willing to take less than the collateral, they sell the note at a big discount and let the note buyer hassle with the foreclosure. Once you get to the actual foreclosure, all the lienholders hassle has already happened and they aren't going to just let Joe off the street take the property for an amount materially below the net realizable value.
Caliber
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AG
Do your homework so this isn't you...

http://www.foxla.com/news/local-news/man-says-florida-villa-he-bought-at-government-auction-turned-out-to-be-a-foot-wide-piece-of-land
aggiebrad94
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AG
Brad06ag said:

Do your homework so this isn't you...

http://www.foxla.com/news/local-news/man-says-florida-villa-he-bought-at-government-auction-turned-out-to-be-a-foot-wide-piece-of-land
Broward County

Why am I not surprised.
jmazz
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AG
Late to reply here but would be happy to give you some pointers and things to consider. I've bought at the Brazos County foreclosure auction (both trustee and tax). Lots of things to consider/research. When we go we take cashier checks of all sizes so in the event of winning a bid we can pay it as close to whole as possible. Also, if you haven't yet, check out the local (to B/CS) real estate investor club: https://www.brazosreia.com
Aggie@state.gov
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AG
pls edit your weblink to take the period out at the end so folks can get to the site.
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