I’m looking into better ways of buying flip properties rather than going through MLS. I’ve found good deals on MLS, but they are few and far between, and now I need to get a higher volume of deal flow. Does anyone have any experience buying foreclosures at the weekly auction at the Martinez Courthouse for Contra Costa County? Specifically, do you pay the entire amount in cash at the time of the auction, or do you put 10% down and close within a certain amount of days? How much due dilligence do you typically do before bidding? Is there an easy way to see the results of past auctions (i.e which ones went back to the bank vs. sold to private bidders, price sold, etc.)? My understanding is that most go back to the bank and become REO’s. If this is the case, do you try to buy from the bank before the auction and have them cancel the auction? Any comments are appreciated…

-Josh www.BayAreaREI.com

I don’t have specific experience with the Martinez Courthouse, but the general rule is 10% down immediately following purchase. Typically you have 30 days to complete payment, but this should be verified with the county clerk and the lender foreclosing.

Most of the time, the best you can hope for is a drive-by before the auction begins. It’s rare to find a homeowner willing to allow a prospective purchaser to inspect the home before auction.

The best resource for foreclosure stats is the county clerk, but you may be able to find some info through various websites like www.propertyshark.com for metropolitan areas. But most of the sites online are out-of-date.

As for REO vs. auction. I’d say it really depends on the lender, market, homeowner, etc. For example many banks like to unload foreclosed properties in bulk (I.E. an investor would purchase 5 properties rather than just one). In my opinion, your best resource for high-end markets is finding an experienced local attorney to do your bargaining for REOs when not purchasing homes at auction.

Hope this helps…

Thanks, Craig. The bulk option you described seems like the way to go in terms of price. However, I’m getting a skewed sense of reality from some other forums that make it sound like you need to be buying $50 million a month to get the attention of lenders. I can’t imaging that there are more than a hundred or so buyers at this scale in the country. Any idea what % of FMV to expect when buying at an auction? I’m guessing this percentage varies considerably from area to area depending on local market conditions, but a ballpark would be helpful. If I’m able to get data to analyze from the county, I will post the results here for reference…

In my experience, the reason for going through a knowledgeable attorney is the feeling of safety for the lender. The last thing they want is another distressed owner… Which can help an average investor compete with the big bucks. Although, like you, I’ve yet to meet anyone making a bulk purchase (we’re probably reading the same research). In the end, most homes in the bay end up on MLS with an agent whether they are bank owned, foreclosure, estate sale, etc.

For the low end markets you can sometimes find homes in the 50% FMV range. For high end markets like the bay area you’re lucky to get 70. 80 is my typical cut-off. Fortunately for us, lots of homes are popping up in the bank owned arena and if you can get them turned fast, profits are pretty good. Speed is most important in this slow market.

Hi Josh,

Based on my June stats property that goes back to the bank is sold at an average 16% discount. In June we had $2.8B sell at trustee sales (foreclosure auctions) in CA, and though I won’t have our report done until Friday I expect July sales to top $3.5B.

I attended the Contra Costa auction last week (8/1) with a reporter. I reviewed the properties scheduled for sale and didn’t see anything interesting so I didn’t bring a check. Big mistake. A property at 4025 Rocky Point Dr in Antioch, with a Zillow Zestimate of $583k, had an opening bid of $450k. I wasn’t interested becasue I was worried the value may now be closer to $499k. At the auction the lender dropped the opening bid to $387k. Took everyone by surprise and no one bid – the bank got it back for almost $200k back of Zillow’s Zestimate. We are going to see a lot more bank discounting. Definitely a good time to be at the auctions.

For a complete list of what is selling at the auctions each day in Contra Costa, or any other CA County, check out my website at www.ForeclosureRadar.com. Be sure to check out the Track feature, as we are the only foreclosure site that provides a complete list of what is going to auction each day. For example our site had the complete list of 60 properties for today, where the foreclosure calendar at proprty shark mentioned above showed a total of only 11.

Hope that helps!

Sean O’Toole

ForeclosureRadar.com

P.S. You’ll need a cashiers check for the full amount of your bid at a foreclosure auction. If you don’t have the cash you can still by foreclosures from the owner before the auction or the bank after the auction with little or no money down.

Sean,

I think we must have been at the same auction on 8/1. Thanks for the info, and wow ForeclosureRadar.com is a fantastic site! I’ve dropped some cash for some other subscription services when I was actually looking for exactly what you are offering. I’d love to sit down with you and discuss what you’re doing and your experience in foreclosure investing (maybe I can buy you lunch?). Since I can’t locate an email address for you from your profile, I’m going to email you via your website’s contact form, or you can send me an email to josh.hohman at gmail dot com.

Sean,

I’m impressed as well. Your service looks great.

1. Can you explain why your big competitors can’t seem to keep their data up-to-date?


2. I’m curious, is it an issue of leg work?

Hi Craig,

Sorry I missed this. Yes, unfortunately to a degree it is leg work. First we have more than 50 validation checks we do as we enter new notices, and then we manually research exceptions. You can’t keep the data up to date, and track the auctions, without accurate sale data. I am not aware of any other site that does this.

Best Regards,

Sean

I like to think I’m the ultimate real estate wholesaler. I buy properties for cash and resell those properties minutes later for all cash with just a commission markup. I purchase these properties from trustee sales that happen every day at the local courthouse steps. My local auctions are held at two local courthouse locations at 10am, Noon, 12.30 pm and 1:30pm. I have made this opening statement sound like foreclosures are so easy that anyone can do it. This can’t be farther from the truth. My office has 10 members on the staff trained in the foreclosure business. We triple check everything we do. That is why our customers don’t flinch about a commission up charge when we flip a property to them there is a guarantee that title is clear and that is a big advantage in reselling for a profit.

Web Reference: http://WalnutCreekRealEstateInsider.com