IRS Auction Question - Posted by Jimmy

Posted by Nike on April 10, 2007 at 13:28:40:

The buyer will take subject to senior liens. You will want to know that before bidding.

IRS Auction Question - Posted by Jimmy

Posted by Jimmy on April 10, 2007 at 12:27:29:

how do I canculate a risk premium for unknown conditions?

looking at an IRS auction property. opening bid (100K) is about half of what I think comps would be.

there will be no opportunity to inspect the house, other than driving by. [well, no official opportunity. if I can find the occupant, I will flip him or her a $50 bill to let me poke around]

anyway, assuming I do not get an opportunity, I have to include a lot of room for the unknown.

built 1971. the exterior is brick and in decent condition. the roofline is nice and level. its on a slab. the roof looks to be about 10 years old and still servicable. garage door needs to be replaced. driveway has a lot of cracks. some rot around windows and doorframes. exterior paint

I’m thinking maybe go as high as 120K. If the interior is a horrible mess, and I have structural issues, I can see spending $20 a foot ($36,500). That’s in line with recent major rehab work I do on my props. If the condition of the interior is in line with the exterior, I will not have anywhere near that amount of work to do.

anyone ever bid one like this?

If the job costs me $20 a foot, this will be a very disappointing deal. if it costs me $5 a foot, I hit a homerun.

am I crazy to go as high as 120K?

Re: IRS Auction Question - Posted by Natalie-VA

Posted by Natalie-VA on April 11, 2007 at 11:26:22:


We’ve bought quite a few at foreclosure auctions without seeing the inside. We’ve been very fortunate. There have been some bad ones, but nothing we couldn’t conquer. I’ve heard horror stories about others. There was one where the outside looked great, but the inside was gutted down to the studs due to termite damage. There have been quite a few where the occupants ripped everything out during the eviction process. The best thing you can do is look in the windows and talk with the neighbors. If it’s not occupied, you might be able to gain entry, but you didn’t hear that from me. By the way, I once put my face up to a window at a vacant one, and there was another face staring right back at me. I guess it wasn’t vacant after all!

Good luck. Higher risk means higher reward!


Re: IRS Auction Question - Posted by lukeNC

Posted by lukeNC on April 11, 2007 at 07:20:12:

Whats the FMV? That determines how much i’m spending.

And like Nike, get that title checked out pronto.

IRS Auction Question - Posted by Nike

Posted by Nike on April 10, 2007 at 13:11:54:

How much is the first mortgage? any other liens senior to IRS?

Re: IRS Auction Question - Posted by Jimmy

Posted by Jimmy on April 10, 2007 at 13:20:39:

no other known liens or encumbrances.