Foreclosure in 23455>Question Details

Bayside Buyer, Home Buyer in 23518

What help is recommended when purchasing a property from a foreclosure auction?

Asked by Bayside Buyer, 23518 Mon Dec 1, 2008

I have friends from other states that have made some smart purchases at auction, but I realize the rules vary from state to state. Is there anything unique about Virginia auctions that a bidder needs to look out for, and how can I best protect myself? Is it better to hire a real estate attorney or a Realtor that specializes in foreclosures, and how much do they charge? How much extra should I plan on spending in auction fees? I do plan on attending several in person before considering bidding. Also, I know that you must pay a deposit the day of the auction ( which I have available), and that you typically must close within 15 days. Is the financing process any different than a regular sale, and which lenders or brokers are best equipped to close that quickly?

Help the community by answering this question:

Answers

13
Easy, I've gone to auctions, they are fun.
1. Set a price you are willing to pay before you go, and stick to it. Know the value before you go!
2. Look at the property before you go. Owners might still be there, so be respectful!
3. Take your 10% deposit, you keep it, but it shows your intent.
4. Arrange financing BEFORE hand. Hard money lenders cannot always close in 15 days that is required.
5. There are no auction fees. Unless you go to an auctioneer and not an attorney handling a foreclosure auction.
6. Read the legal notice about the sale, or about the attorney, sometimes they have certain guidelines to follow.
7. Go to a few first and get a feel, talk to the players there. Ask for recommendations of closing agents, title companies. Most buy with Credit Lines so they can close quickly.
8. Enjoy! And remember, not all properties that are quoted at a certain price, start at that price, sometimes banks will open the bid lower. And make sure the sale isn't cancelled first! If it's a good deal, I'll probably be trying to buy it before it goes to that auction!

Have fun! Buy low! Email me if you have any questions.
1 vote Thank Flag Link Tue Dec 23, 2008
If I were you I would hold out on buying a foreclosure or shortsale right now. Your probaly asking why. Well in the upcoming months the banks are going to be so in need of money that they will be willing to let the properties go for much less than they are willing to let them go or now. Pretty soon they will be running out of the bailout money and then just ask yourself a question. Then what? They will need the money and the loss will be something they will have to endure. If they want to stay afloat. It is my understanding through a reliable source, the strongest bank in America is now preparing itself for the really hard times.
1 vote Thank Flag Link Fri Dec 19, 2008
In auction buys, investors hv to really do back end job. Ie...lien search, violations, etc. Things like these. Bur remember & have patience to wait for thee good deal u worked upon. As auction buys r final & mostly get about 30 days to close deals.
0 votes Thank Flag Link Sat Dec 27, 2008
See blog posts referenced below. Hopefully they will help you .... sorry to be late answering, it's been a busy busy month for me! Best wishes...
0 votes Thank Flag Link Sat Dec 27, 2008
You want to check the paper for auction notices. Drive past the house, peek in the windows, see if its currently listed, and try walk the house.

Before bidding, know what the homes are closing at. Bidding usually begins on what is owed, or a little below it. You do not want to get caught up in the excitement and overbid.

There are a lot of short sales and bank owned properties in the MLS. If you can wait for a response and do not have to move right away, you can get a great deal.

I listed a short sale in Kiln Creek for 269,900 (which was already 10k below comps) and the buyer got it for 220k. It appraised for 274k. The deals are out there, you just need someone to work with you to find them.


Best of luck !

Angie
0 votes Thank Flag Link Thu Dec 18, 2008
You will want to go to a few sales before you go to one to bid. That way you will feel more comfortable with the process. Most auctions have previews and that is the time to do your information gathering. View the house, bring along an inspector, have a title company do a title search for you so you know what liens are on the property. When you buy at auction you are buying any liens on the property so make sure the price will be enough to clear them or that the lien holder will be releasing the lien.

You will need a cashier's check for the amount of the deposit so be sure to have several in different amounts so you do not have to give more than is required, if you do not close you loose the deposit.

You will want to have a loan pre approved pending only contract and apprisal. They take back up offers at auctions so again if you do not close then next guy will and you still loose your deposit.

The buyers premium is paid at time of closing so if the premium is 10% and the sales price is $200,000 unless you want to pay the premium out of pocket your loan approval will need to be for $220,000 and the value must be that as well. A good rule of thumb at auction is to pay no more than 75% of market value.

Make sure you know the value and have decided in advance how much you are willing to pay. Auctions can be exciting so do not get caught up in it and pay too much.

Hope this helps, you can reach me at 757-375-1777
April Partida
Realtor, RE/MAX Allegiance
Virginia Beach, VA
0 votes Thank Flag Link Wed Dec 3, 2008
There are agents that specialize in listing short sales (essentially, a pre-foreclosure) and/or REO (bank owned) listings. As far as agents that specialize in helping buyers who want to purchase short sale listings and reo listings, that's a little different. I've worked with several buyers looking for REOs, properties that need rehab, HUD homes, and VA homes with alot of success. One client was able to purchase an REO listing for around $100,000 less than the estimated ARV (after repair value) and another was able to purchase a property sold two years before for $376,530 for just $257,000 and needed no repairs. I see great deals all the time.... E-mail me at jon@mcachran.com or call me at 757-215-4246 and I'll send some your way. And a good mortgage broker should be able to help you with your lender questions and you can find other lists of hard money lenders online.
Web Reference: http://blog.jettyrealty.com
0 votes Thank Flag Link Wed Dec 3, 2008
Thank you everyone for your responses. Can anyone recommend a local agent that specializes in pre-foreclosures and REO properties? I appreciate the link to the lender edclender.com. Does anyone have any other recommendations of lenders that specialize in this? Thanks.
0 votes Thank Flag Link Wed Dec 3, 2008
Lending can take up to 30 days to close majority of the time. I would never recommend for anyone to purchase a home sight unseen, deals may look great could be disaster if you dont know what you purchased turn into a money pit
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Tue Dec 2, 2008
You don't necessarily need an agent to go with you to an auction. However you do need to make sure that you understand the auction terms, auction premiums and whether the property you are interested in is being sold "absolute". You should tour the properties you are interested in, most of the mega-auctions have preview days and make sure you know what you are buying.

You need to have your financing fully approved before you head to the auction so you need to find a good local lender who you can meet with face to face. Provide them all of the documentation they require. With everything in place they should be able to complete the appraisal and have loan documents ready within the 15 days.

Auction properties are not always the best deal and do leave you truely at the mercy of the lender. Have you fully explored looking at other REO properties? When you add the 5% buyers premium, the requirement to bring certified funds (more than you need with a standard REO) and fast close requirement, you may find that other properties are truely a better bang for your buck. In that case you do need a Realtor who has experience as a buyers agent working with REO's in your area. If you need a recommendation let me know.
Web Reference: http://varealestatetalk.com
0 votes Thank Flag Link Tue Dec 2, 2008
Take a buyers agent with you to guide you thru the process....the lender pays their fee and they are worth every penny!
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Mon Dec 1, 2008
The Hagley G…, Real Estate Pro in Pleasanton, CA
MVP'08
Contact
Also, the link at the bottom of my first answer: http://www.edclender.com is a great local hard money lender in this area. They allow you to put little or no money into a deal and finance deals the need work and wouldn't get financing elsewhere.
Web Reference: http://www.edclender.com
0 votes Thank Flag Link Mon Dec 1, 2008
A hard money lender would be good for a foreclosure in need of repair and provide the ability to close quickly. But it's always good to educate yourself as much as you can. I'd start by picking up a good book on the foreclosure process from Amazon or Barnes and Nobles. As far as the auction goes, the bank is generally just looking to get back what they have in it. It's best to do your research or work with someone (like a Realtor) who can do research for you and find out what something is worth so that you know what to bid and when to stop bidding. Let me know if you have any more questions.

P.S. Here is a foreclosure auction in the Charlottesville, VA area... very similar to what one would be like in this area: http://www.realcentralva.com/2008/10/17/this-is-what-a-forec…
Web Reference: http://www.edclender.com
0 votes Thank Flag Link Mon Dec 1, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer