Today I attended my county foreclosure auction. Glad I went. I can see why the REOs on the MLS are of poor quality and are also few in numbers. This small group of investors bought many of the properties that came up. They had previewed almost all of them, and were clear why they let go of the properties they let go of. The investors were friendly and helpful in showing me what they were doing and how.
Two of the investors owned brokerage companies that buy foreclosures from the auction for other investors. They also provide both hard money loans and private financing. The terms are very short @ 9 months and rates 10%+. With the stipulation that you later sell your property with them when you flip it (it was assumed you were going to flip, which I’m not ready for that - and this wasn’t a deal breaker).
Can anyone shed any light on the RE Investment brokers? This seemed reasonable to me. They both charged a 3% commission for buying the property which included a pre-viewing the site, title search, doc search, etc. They purchase the properties with hard money and then I need to convert within 9 months which means I would need to wholesale these or find a different bank to work with b/c my current bank does not cash out investment properties.
There are a lot of companies that do this kind of service. Pro Auction Services out of Tampa handles most of the country and their fee is far less. What value is the broker adding to the transaction, everything you listed either should be done by you, or is done by someone else in the transaction (title work is the job of the title attorney don’t let a broker tell you they are providing someone else’s work as a value for what you pay them) Further you then are not tied to a broker for the sell that already seems a little distrustful.
Realtors have a code of ethics because they need one to keep them in line, no other industry has to outline a minimum level of honesty to their practioneers and then update it every year as people find a way around it.
Thanks for responding Hartley. I’m in Washington state and called ProAuctions - they do not service the county I’m in, but your info has directed me, so I sincerely appreciate you taking the time. I’ve since found Vestus (auctions), which I’m researching as well as some others.
I’m wondering if anyone has any experience using auction companies - meaning, if buying a property at auction (although more “risky”) is worth the return you get, and whether you get “enough” protection from using an auction company to justify the risk. I’m wanting to know if anyone has experience with an auction company and how likely it is you’ll end up with a bad deal from them (for example, they accidently buy a second mortgage and miss a huge first lien that you’ll be responsible for).
Buying at foreclosure auctions…
Olympicflyfish,
I suggest that buying at ‘courthouse steps’, which in my county now happens online, is for experienced investors (and same for buying through companies that buy/sell auction properties). You need to know what you are doing, and definitely have title searches done by title company or attorney prior to buying. Some veterans I know say title companies they work with routinely will give them a good deal, such as initial check of title for free or very cheap, as long as investor buys a decent percentage of properties and gets title work and title insurance with them.
Also, there may be an occasional deal, but I know in my area most properties get bid up to where they aren’t much of a bargain. That combined with the added risks is why I have little interest in the auctions. I have heard at least as many stories of investors getting burned at auction as I have of big wins at auction. I know a few investors that shop at auction once in a while, but it is just one of their many tools for finding deals… Also, advertising, bandit signs, mailers, some MLS deals, buy from wholesalers, some just pick an area and go door knocking… As I read in Robert Allen material long ago, if you want to catch fish, it is best to keep several lines in the water!
Best wishes,
Chris in FL