Hey, I want a $100 property, how do I get into this advertised action?
- The foreclosure and REO industry is a large complicated one with many ways to benefit and many ways to get burned. I won't go into all of the in and outs of the industry and how to benefit, but I would like to touch on these $100 auctions.
- County Auctions are where the foreclosure auction of a property actually takes place. Yes, every single county in every single state holds these auctions on a daily basis. Each county has their own set of rules on what days and times they auction properties as well as whether they hold their auctions online or in person. Which ever county you would like to participate in will have those rules setup usually on their Clerk of the Courts website.
So, what are the steps that I need to go through to be able to bid?
- If the county you want to participate in holds their auctions online then you will need to create an account with that county prior to being able to bid at Auction.
- Once your account is created you will need to fill it with funds, the percentages vary, but lets say that your county needs a 5% deposit of the bid price. So what that means is that you have to place 5% of your possible maximum bid for any property into this account, otherwise they won't let you bid.
- You have decided you want to only bid on properties that are $50,000 or less. You will need to add $2500 to your account.
- If the county you would like to bid in has in person auctions, best to come with a pocket (or briefcase) full of cash, it'll be due at close of auction.
Ok, I am all set up, on to my first auction.
- In the online auctions there are two ways that bidding can occur, you can set a maximum bid and let the software up your bid as you are outbid or you can watch the auction in real time and bid manually.
- So, you have done your research and you have found the house that you would like to bid on.... wait, did you get a title report before the auction? Oops, more info on that in a later post.
- There are 30 houses being auctioned today, your property is #17. So you wait, and you wait, and property #11 two people are manually bidding against each other and waiting till the last second to put in their bids so this property that should take around 5 minutes is taking 20 minutes. What these two don't realize is that you can't sniper bid on these county auctions, it resets the clock. So you watch them for another 5 minutes and somebody finally concedes.
- Ok, here we are at Property #17. There are to many scenarios to talk through so we will go through a few assuming you are bidding manually.
- Your dream property says that the plaintiff has a maximum bid set of $75,000 and the property is valued at $100,000 with a final judgement of $75,000. Oops, guess you should have looked at that prior to spending all that time and effort, you can only bid up to $50,000 with your deposit.
- Your dream property says that the plaintiff has a max bid set of $35,000, is valued at $60,000, and has a final judgement of $36,000. Great you can get in on the action. Bidding starts and it pops to $55,000. Shucks, guess you will have to try again.
- Your dream property doesn't have a plaintiff max bid, is valued at $60,000, and has a final judgement of $45,000. Great you can get in on the action. Bidding starts and it pops to $45,100. OK, the plaintiff (most times the bank) can no longer bid, why not you ask, well that will be another post. The clock is ticking and you put in a bid of $45,800. the bid price goes to $45,500. The clock ticks. The bid price goes to $45,900 all of a sudden, someone outbid you. You put in another bid of $48,000 and the bid price pops to $47,500, you are now winning. The clock ticks, its almost yours, nope the bid price goes to $48,100, you have been outbid by someone that thinks they can snipe bid you, the clock starts over. This goes on for several minutes until the other person takes you over your $50,000 bid cap.
- Same scenario as #3, but this time you win the auction at $47,500. Congratulations, but you aren't done yet.
I won - now what?
- You won your auction at $47,500. Most of the time the auction will send you an email directly after the auction that you have won with a request for the total that you owe (not just the $47,500) but also fees.
- If you have $48,000 in your auction account you simply log in and pay it. If you only have $2,500 in your auction account, its time to get moving. You now have to go to your bank, get the additional funds so that you can take it down to the county courthouse, deposit those funds, then come back to computer, log in and pay the amounts online. In a lot of counties you only have until the end of the day (4 pm) to pay the funds. If you don't then you get banned and the property gets re-auctioned.
- Now you wait 10 days for the deed and proof of purchase. That is if you didn't just buy a subordinate lien.
I Lost - now what?
- So you have lost your auction. Unless you want to outbid everyone and money is no object get used to it. There are a lot of competitors in these auctions, including the banks, and a lot of money that gets used. Do your research, stick to your maximums, and you will get there eventually.
Future Posts
- Doing your Research
- Rules for the plaintiff
- Getting Inside
- Securing your vacant winnings
- Oops, yours came with Tenants
- WOW, not what I expected to see.
- Possible Problems with your win
- Who are all of these people in the defendants list
- Right of Redemption - Owner and IRS
- Title Reports
- Did I just win a subordinate lien? HOAs and Equity Loans
- Property Taxes
If you have a specific topic you would like to see covered or have additional questions on these subjects, please feel free to contact me at justin@kajukaproperties.com or visit us at Kajukaproperties.com
