Due diligence before an auction

I am looking into buying properties at government tax and foreclosure auctions…

Is there any way to know the condition of the house? For all I know, it is infested with mold and termites…

I don’t think auction properties have a way to get out pending inspection…

Also, how do I know what is the outstanding amount due on the mortgage and the total of all liens?

What is everything I should look for beforehand?

And are real estate auctions really a way to find good “deals?”


When I buy at an auction we fly in 1, 2, 3 days or more before the auction so we can drive by, look at and get in / look in the windows and check condition, then we go back to our hotel just before dark and run the numbers / estimate rehab for properties were interested in, this way were ready the day of the auction and know the maximum amount of money we will bid.


Gold River is spot on for foreclosures.

Define what you mean by “government Tax Auctions”

True tax lien/tax deed auctions will wipe “MOST” things from title.

IRS Tax liens are sold based on their place in the chain of title.

Be more specific in what you are looking for.

Tax Deed Sales

As I said in the last post…TRUE tax DEED auctions will wipe MOST liens from title.

The IRS will have a 120 day ROR regqardless.

Tax Deed states like TX and CA have different liens that may survive the sale.

Check the statutes for the state you intend to invest in.

All courthouses have a law library and the librarian will assist you.

Go there EDUCATE yourself BEFORE you go off the deep end.

Once you learn the who, what, how of tax sales…then you can start to do due diligence on the properties that you propose to buy.

Are you writing a book or planning seminars, etc?

On this board you have asked questions about leases, options, short sales, apartments, SFR, Hotels, Motels, subject to, foreclosure, tax liens, etc., virtually every aspect of real estate…just curious.

And are you doing any real investing?

Had a friend similar situation to yours…he spent over $70,000 on books, tapes, seminars, and has YET to buy his first property.

Knowledge is POWER…unused it is a WASTE.

I just made offers on 10 apartment complexes the other day. I have to qualify for financing or see if the owner will finance.

I. tried to wholesale a house, but it was owned by the bank, so that one didn’t work. I’ll get back out there and look for more. Once I find something that works, I’ll repeat it a thousand times.


Redstar when you made your 10 contract offers to purchase in writing the terms and conditions of the offer should have been spelled out in writing, so if you wanted owner financing you would request it in your written offer. Keep in mind even a zero dollar down offer requires closing costs to purchase and you should expect an owner (Seller) will want you to pay his and your closing costs if he's allowing you to take over his property zero down!

The closing costs will cost forty five thousand ($45k) per one million ($1m) of contract value! It will cost money to convert the insurance, utilities, vendors, etc. over to your LLC’s name, remember you will need to be a legal corporation to take on ownership so it’s not attached to you personally.
You will also want to have a property evaluation done similar to a home inspection and termite / pest control reports before closing to protect you from future liabilities.

I tried to Wholesale a House! Really? You have a warped sense of what wholesaling is as you don’t make offers for wholesale properties to the bank! You make wholesale offers to property owners who have some reason to need to sell their property, a death in the family, a divorce, a bankruptcy, a need to sell a second home, an inheritance, a immediate financial crisis, a medical emergency!

You can make offers like rain drops in the night, or you can get smart and start advertising to get real motivated people to call you and offer their home to you at a wholesale price. You also have to start building an investor buyer list to have people you can directly market newly contracted wholesale homes to.

As I said before apartments / hotels / commercial property is out of the question, even if you could convince someone to turn their property over to you ZERO down you could not afford to pay for inspections, closing costs, transferring and changing vendor accounts, etc.

Your wasting a lot of time, by this time next month you could have an extra couple of grand in your pocket if you’d stop trying to find short cuts and just do it!


I have my buyers list.

I lack time to go driving through the ghetto.

I have another job, but I’ll get around to it soon.

I should invest in some bandit signs. “We Buy Junk Houses Cash,”… That way, the deals will come to me…

Also, what’s holding me back:

Is looking for high grass really the only way? I’m sure there are plenty of houses out there with low grass that could still be wholesaled.

I haven’t even gotten around to talking to owners yet, but wouldn’t it require an actual inspection to see what a flipper would have to do to make it into it’s ARV state?

I cannot visibly inspect a house and tell all of this stuff.

Am I supposed to be hiring inspectors for these?

But I’m all for making low ball offers to people desperate for some cash.


         Your not paying attention very well or learning from our postings! 

A buyers list is never complete, it is a living breathing document and always gaining current buyers and potentially losing potential buyers, you can never have to many investors looking to buy single family homes, the ultimate goal is “Seven Billion” (7b) people.

I never said anything about ghetto’s, I said choose area’s that have a lot of properties (Single Family Homes) that have deferred maintenance! Pealing paint, cracking stucco, trash in the yard, weeds, a bad roof, cracked fireplace, beaten up mailbox, cracked driveway, broken windows, etc. And you should A. Put a bunch of door hangers out on a single morning! B. Send a post card to the properties address! C. Put a door hanger on the front door when you see the property!

I have a job, I work 15 hour days 7 days a week! There is always time if your motivated! I love my work!

Bandit signs is just one way to drive potential sellers and buyers to call you, you have to work a large spectrum of avenues (Platforms) to attract sellers and buyers!

What’s hold you back is “Paralysis of Analysis” you are so wrapped up that you lack the vision to see the forest through the tree’s!

Grass? Have you been indulging again?

In wholesaling you don’t talk to owners until they talk to you, trying to talk to an unmotivated property owner who has no desire to sell their home is a huge waste of your time! Although I do understand wasting time?

A house yes, an apartment property no, your liability is huge in apartments, your liability is “ZERO” once you assign a wholesale contract!

No, you are setting up a contract when you wholesale that becomes the responsibility of your “End Buyer”! But you do want to hire and make a property evaluation for a commercial property to protect you from unknown liabilities!

You make offers which are in line with your market! Are you going to sell me your RV park for “One US Dollar”? No, you are looking for a fair price for the property which makes the transaction a win / win for both parties! It should reflect a good overall assessment of FMV and current condition!

A low ball is outside the strike zone and you can not score a home run from a poor / lazy offer!


I am not trying to procrastinate, I’m trying to make sure I’m prepared…

At this point, I have a list of about 10 buyers that I got from " We Buy Houses, " signs…

My only method of finding houses is to drive through neighborhoods and look for tall grass… I will be buying some bandit signs so that people will call me…

I will work on being able to estimate the ARV and rehab costs of a house… I have the formula from Rando’s book to help me…

There’s one major thing I don’t understand… I see nowhere in the contract where it says that the purchase is cancelled if I don’t find a buyer within a certain number of days… What should this number of days be? Obviously, I have no cash to put in… Also, the book says that I should not inform the sellers that I plan to resell the house… How can this be if the contract has a clause saying that if I don’t resell it, it is cancelled?

Once I get these few questions ironed out, I can start searching for houses a few hours per day… And I will…

And by the way, I’m not scared of the ghetto… Which is one reason I think I will be successful at this…

I am not trying to procrastinate, I’m trying to make sure I’m prepared…

My friend who spent $70,000 of books, tapes and seminars will ALSO tell you he is not procrastinating…YET he had NEVER bought a single property.


So do you know the answers to those questions that are preventing me from “just doing it?”

Yes, You and your grandiose ideas . Start small, figure out something you can do. I started in 1970 with $1,300.00 and have NEVER looked back. YES, 1970 is not a typo error…I am getting u there.

NOBODY in their right mind is going to listen or act on your wild schemes and ideas.

Think about how absurd it sounds to a seller…I want to buy your multi-million dollar real estate. I want you to finance it. I got NO MONEY down. I have no money for debt service. It has to cash flow for me FROM the start. You got about as good a chance for $1.00 at mega million lottery.

ACCOMPLISH things that you can ACCOMPLISH and stop the wild dreams of making millions on your first deal.

There is NOTHING wrong with thinking ourside the box…HOWEVER …do not make the BOX too damn BIG , insuring FAILURE.

FEAR of failure has STOPPED more people than anything else.

Make up your mind JUST DO IT.

I think we were on the topic of what’s stopping me from wholesaling.

The major question being that I don’t see anywhere in the contract that says it is cancelled if I don’t resell it within a certain number of days. This is important. Also, how can I not notify the seller of the pending sale of the house if this clause is in the contract?