Definitions

Foreclosure Auction:

Mortgage foreclosure, the borrower doesn’t pay their mortgage long enough, they go through the entire legal process and it goes to an actual county auction or a parish or borough so we’re talking about the United States here.

Tax Deed Sale:

is also referred to as a excise foreclosure where the property owner doesn’t pay their property taxes, generally it’s sold as a excise lien first, and then after a reporting period if that excise lien is never paid it then goes to an actual foreclosure.

Auctions

I’m an innovative real estate investor so I am focused instantly with the merchant themselves and I’m not sourcing my bargains from an agent or if it’s already on world markets, on the MLS or even on activity. You might be thinking to yourself ,” Well, Phil, why are we talking about auctions here if usually you don’t source your bargains where other people know about them ?” Well, that’s a good question.

There are certain circumstances where it is best to let a property go to auction:

• Title Issues
• Liens
• Deed Issues
• Probate
• Heir Issues

Also, if you’ve been in this business for any reporting period, some people are procrastinators and they will literally call you the day before the auction. There’s not even enough time to call the lender, actually get an updated reinstatement or modernized payoff. Even if the coping is a home run there’s simply not enough time to get the information from the lender to be able to actually buy the belonging, even if you have the cash in your bank account.

The Sandbox

If you don’t have the money you can’t play in the sandbox.

Okay, so whether you can play in the sandbox or not I know you’re really going to enjoy this blog. Abraham Lincoln once said that ,” If I have eight hours to cut a tree down I would invest the first seven hours sharpening the ax .” That will be the theme of this blog. The first seven hours is going to be you preparing for the auction. You’ve got to have your act together and you have to know your trash because the auction itself is not where you’re going to play all your recreations. It’s going to be at the moment in which you get all of the data and you do your due diligence.

The First Seven Hours

Okay, so we’re going to call that the first seven hours, all right, the first seven hours. You know what that means now, that’s this Abraham Lincoln quote.

The first thing  to do in this section of seven hours is you need to do your property homework, on the property itself.

Now, there’s several parts to this:

Value

• With property homework there’s some obvious ones, the first being cost.
• You may not be able to ascertain the complete total cost because you may not be able to get inside but I’ll also say this. When the time has come to smothering you’d be surprised how often there is a back door or space that might be open.
• Now, I’m not hinting you do that but these beings I know they tend to find a way to get inside the property if it’s vacated prior to the actual auction resulting.
• You can judge a house on the exterior easily but perhaps the interior is more difficult.
• The utilities won’t be on so you won’t ever know how the plumbing is or the electrical or the HVAC and heating and gale but you have been able at the least get some grade of understanding by taking a ogle and also looking at persons under the age of the home.

These two come together though because in order to truly understand cost you have to understand smothering. You want to really start at the comparable commerce to understand what the dimension can sell for all fixed up as well as what it is as is. Now, these two sections of information help you better understand whether or not you are able to even ingest your time going any further down the road of these seven hours of sharpening your ax. That would be the opening entreat summing-up, that’s what I’m going to call it here, opening entreat summing-up.

Opening Bid Sum

If this opening offer quantity is really close to the toll it’s probably not going to be worth your time. That’s not always the case but most of the time it is because the bank is generally going to make their offering at the least what the hell is owe.

Here’s the pattern:

If the opening offer going to get $100,000 and the toll … I’m going to call this offer the O offering. Then, this is the toll and the toll is, let’s say, $200,000. Well, this is an fomenting potential auction because there’s a lot of enclosure in this batch. We know that the opening is generally where the lender’s going to tap out at, and then the only race you’re going to have between $100 and the toll is other investors and so this is good.

Instead of $200,000, if the toll is say, $110,000, the problem in this motif is that the lender might go all the way up to their $100,000 and there’s just no enclosure in there. You might be saying ,” Well, Phil, what happens if the toll is, let’s say, $80,000. Is the lender going to come up to their $100,000 opening offer ?” Maybe not. They might max out at 70. They generally do a drive by VPO or a drive by appraisal privilege before the auction if they’re in a situation like this to ensure that they at least offering on an amount that’s reasonable.

This could go for less than opening offer sum, it sometimes depends. You can see what the lowest hanging return batch is, when the opening offer sum is significantly lower than the toll. Now, I’m not talking about burden decision toll, I’m talking about the actual comparable auctions on the MLS closed comps toll. I’ve got a great video on that, Adjudicating Property the Right Way, that’ll help you better understand what I necessitate by what I just said. Okay, so if you understand that the opening offer sum is going to be well below what the price is , now all of a sudden you may have some promise here. Perhaps you’ll is the possibility of get into through one of the side openings or one of the back entrance. You seemed inside and you’re aroused, this batch could have some promise.

Do a Title Search

You’ve got to know what’s on the title because some liens will subsist the auction such as

• Unpaid Taxes
• Impositions
• Tax Liens because sometimes they stay on the belonging after the auction. You need to know what’s going on with not just other liens but what if they did some sort of be built upon the owned and then there’s a mansion tell that never went closed off. That could be a real question, that could spread past the closing. All kinds of issues could arise.

Professional Title Search Services

I can do title searches through different districts that I invest in online. I can do a speedy investigate but I go to the next tier here because I want to make sure there’s no mistakes. When you do make a mistake on this it can be very troubling. You buy a owned with what’s called ” defiled entitle” which is awful. It especially with imposition deed auctions where in many cases with a imposition foreclosure you have to file what’s called quiet entitle. You have to file that after the closing to actually have the ability to resell the owned and give the new purchaser entitle statement because when you buy at an auction you’re not get title insurance.

Quiet Title

When you resell after you’ve bought at auction you don’t always have the ability to give the new purchaser demand guarantee, specifically levy deed auctions, and so sometimes you have file quiet demand. This is extremely important that you understand this. I get professionals implied, I pay for this substance. Yeah, you are able spend money on demand the investigations and the bargains never come together, you lose the option. Well, it’s better to be safe than sorry so I deplete a little bit of store here and sometimes I don’t get that store back.

Your Next Step

If you’ve done all of this analysis, at its consideration of the sub-item you’re in a position now where you can start to potentially consider putting together your max proposition length which is incredibly important. You want to go into the auction with the plan on what your max bid’s going to be. Before you do that we have one more fragment of this seven hours, and I’m going to call it this…

Rules of the Game

You have got to know the rules of the game. Let me tell you some horror narrations. I had a deal one time … Now, I could have figured this out had I been smart enough. I’m going to tell you this lesson so you don’t ever have to do this, what I did.

My Experience

The property was in foreclosure for literally years and the borrower had continued to file exercising a foreclosure defense attorney, these frivolous regulate dress and throw away all types of cockamamie schemes to keep this thing from going to foreclosure. What happened was on the working day of the foreclosure I won the option at $385,000, so I cabled in $385,000 currency to the district, I won the option. Well, in this particular situation there was a seven epoch age where that borrower could dispute the foreclosure market, and he did. When he clashed this thing it get put into this limbo theater where I didn’t own the owned so I couldn’t even put insurance on the owned. If this thing burned down my $385,000 was at risk-risk

The Result

Now, what happened was there were two judges in that county that were handling these disputes. One of them was on vacation of 3 months and another one was behavior backed up. It took seven months to finalise this.

Now, at the end what happened was he won the dispute so he got to keep the owned, think it is or not, it was ridiculous, and I did get my copper back. This came back eight a few months later and I didn’t get any interest on my copper, didn’t get any interest. Thank goodness I got the money back it tied up $385,000 of my money. What the lesson there was this. Had I been smarter … This was a long time ago.

Had I been smarter I would have examined up the foreclosure occurrence accounts and I would have seen that this guy had filed all these frivolous litigations for years and years and years. That would have told me that this was a risky one to furnish on because party could have plucked this stunt.

Legal Help

You’re going to have to get good statute improve, either a foreclosure advocate themselves or a real estate attorney that understands this and works with clients that really buy these properties at these auctions because you could make a big mistake and it could be very expensive. Now, this one aim up only expenditure me the facts of the case that my copper was tied up, $385,000 for eight months, so it was more like an opportunity cost.

Right of Redemption

A right of saving means that the person who got foreclosed upon has the right to redeem or buy the owned back for the amount it went to auction for. An precedent “would’ve been” New Mexico. When the owned be applicable to foreclosure, let’s say it was just going foreclosure for $100,000 and you won the proposal, what if you started refurbishing the owned, started adjusting it up, and then all of a sudden 30 age into it you get a knock on the door and they say ,” Yeah, I still own this property, I flowed and redeemed it. Thanks for setting up my owned free of charge .” It’s happened, so you need to understand the rights and interests of redemption.

No Right of Redemption

Now, particular commonwealths don’t have pretension of savings on mortgages because of the deed of trust or the mortgage will actually voids that. HOA, Home Owners Association, foreclosures sometimes still have these pretension of savings as well as accusation sell. There are situations that involve these and you need to know if those exist or not. Another one, and that might be more on the regulation of video games but including of owned. You likewise have to understand the property’s borderlines, what’s going on with the owned itself with regard to laws.

Example

This one individual was in charge deed marketing and it was a unoccupied batch. A batch of dates these accuse deed sells are unoccupied field, they’re not homes. The figures seemed astonishing so he won the auction and then he eventually learned that that particular batch had a historical overlay and it is not possible to be built upon so countries of the region was mostly ineffective. It was in a residential community and he thought he could sell the batch for $100,000. He paid 10 lofty for it and it is about to change he couldn’t so there’s no erect who are able to develop. He sat on it and he now overcompensates the taxes on it each year so no entertaining, right?

I believe an advocate could really help you here follow out all the things that could go wrong, what you need to be aware of. Sometimes the particular situation will depend on whether it’s a mortgage charge or an HOA foreclosure or what is involved in the actual auction itself.

The Auction

Now that you’ve done your first seven hours , now we can talk about the auction, the actual auction can be either in person or a lot of dates it’s online these days. When you’re dealing with an auction here are a couple of rules I need you to keep in mind.

Max Spending Amount

You do not want to go into the auction and on the wing change your dictation, do not do that. You want to be focused, you must have your max spending amount already set, and don’t change it. What’s going to happen is when you’re there, especially in person, if you listen some other parties you might apprehend ,” Maybe they know something about the quality that I missed. Maybe this thing’s more valuable than I thought it was .” Don’t think that way, you have no idea what they’re up to. Don’t follow anybody else in the chamber. You have your max spending amount and you stick to it.

If You Dont Win It’s Ok

I understand, here in America we’re very competitive. We adoration play-acts and we ever want to winning, winning, acquire. You need to be okay with losing. I lose a whole lot when it comes to these auctions because I don’t like offsetting very much. There’s always some blockhead out there willing to pay style too much for some of these properties. Be okay with losing, it is not a big deal. Be okay if it doesn’t go to marketing. you’d be surprised, if you follow this a lot, how often these belongings never actually go to auction.

Tax deed commerces are pretty much 100%, they ever spread. Sometimes, they’ll refund it up the working day before or maybe the lender will postpone the sale because of some frivolous foreclosure defense attorney’s note, all kinds of reasons to push off the sale. You may do all your work and it may not go to marketing but that doesn’t mean it’s going to always stay in limbo. Hinder an seeing on those, they are unable to come back around.

If You Win

Congratulations, make sure you get insurance bound on that belonging. It’s easy to forget that detail but you’re the owner now. If you’re the owner you’d better utilized some security on there, especially because it’s probably a unoccupied belonging at that point. Maybe there might even be some squattings in there. if it is a charge deed marketing and you have to do quiet identification make sure you file for that. In a lot of cases, I know in Florida quiet identification can expenditure $2,000 so you have to influence that into your proposal. You’ll have an extra$ 2,000 spending when you acquire a charge deed sale.

Further Information

I hope you all enjoyed this blog. If you’re thinking to yourself ,” My goodness, this was some great information ,” well there’s much more where that received from. I’ve got over 200 videos sharing these sorts of erudition. Feel free to subscribe to YouTube. You will get access to these brand-new videos, when they come out, before anybody else. Likewise, check out all my dominate historic videos, they are just flat fabulou. It’s why this is the number one YouTube channel out there. If you want to learn more about me going to see Freedommentor.com. You can grab my two notebooks, ” How To Be a Real Estate Investor” or ” Real Estate Investing Gone Bad “ where I tell all these narratives on what not to do.

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