Okay not sure exactly how to ask what it is that’s the faintest hint of a question rolling around in my head, so I’m going to do my best to be clear. If I’m not clear feel free to shoot me a PM or email to ask me to clarify.
I’m wanting to get into rentals and flipping (Aren’t we all?) but it seems like I remember hearing somewhere about a broker/investor working with HML’s to buy foreclosures at auction. Now, here’s where the question comes in, since you have to have a LOC or certified funds etc with which to purchase a foreclosed house at auction in Texas, and (as my limited understanding leads me to believe) you must present said funds AT THE AUCTION, how does he do this? Do the lenders give him a letter of credit or what? If anyone has any ideas I look forward to hearing them.
No ideas? Come on guys we’re an inventive bunch… It can’t be THAT obscure…
Since no one is helping you, I will attempt to. As far as I’m aware (and here in CA), to place a bid, you have to bring a certain amount, say 10% deposit, in cash, cashier’s check, etc. You didn’t say whether the other investor has this, but if he/she does NOT, I suppose a pre-approval from a lender showing 100% of the purchase price may work, but I don’t know laws in TX, just a scenario I came up with.
Thanks for the attempt… I’ll continue trying to hunt down an answer to that one
This is how it works, like in the other response you will need to bring may a deposit for about 10%. A purchase agreement is then signed probably saying you have 30 days to secure the property. Before you do all that, you will want to get pre-approved by a lender to get the property. That is how you will protect yourself from losing any money, because you already are approved for the loan.
Here is how it works in Ohio.
You take the required amount to bid to the sale, in cash, cashier’s check or money order, made out to yourself. If you receive the wining bid, you endorce the check over to the sheriff’s office. The lender gets your contact information and will contact you within 30 days. If you FAIL to get financing for any reason, you loose the deposit and you can be held in contempt of court. For your own security, get a pre approval before bidding!
North Dakota is like Ohio if you go to an auction sponsered by the US Marshall’s Office you have to be able to transfer the full amount withing two hours. This doesn’t give you much time. Cash talks at these auctions. I have seen some land auctions from some auction house that will do the 10% down with closing in 30 days.