So, I stumbled across a house going to auction listed in my local newspaper. This house just happens to be 3 houses down from where I currently live. The house is brand new built, except for the unfinished basement. What makes me want to get this house so bad is that it is 1000+ more than my current home, and $30,000 less than my current mortgage. My wife pulled comps on the house and says that it would easily flip for $260’s. My thoughts are that this is a perfect deal for my primary residence and I’m already in the process of selling my current home. I could live in this auction home, pay less in monthly payments with primary residence financing, finish up the basement and resell in 7-10 years for a nice profit. Now, the auction for this house is August 19th, so somehow I have to find $225,000 in less than two weeks. Ok, everyone give me the best creative ideas on where to find my money.
I’ve considered conventional financing, but that takes too long. I’ve considered hard money, but not sure if I want to pay the additional fees. Granted, I could just refinance in a few months after I sell my current residence. My wife came up with a keen idea of having someone else buy it at the auction and the lease option of seller finance it to us till we get our conventianl financing. Any other ideas that we didn’t think of? Hurry! I’ve less than two weeks! :shocked
Your not the only one who will have problems raising that kind of money. You can forget investors because at $225K with comps at $260K after you back out a realtors commision there’s nothing left worth risking that much money for. I know I certainly would buy a home for $225K with the HOPE of making $15K??
The REAL questions are…WHY ISN’T YOUR HOUSE SELLING? and why is this house so cheap? It’s bigger, newer, and better than yours and it has to go to AUCTION to sell??? And at a lower price than yours???
What YOU have to worry about is not BUYING that house…but what YOUR home will be worth AFTER this house sells!!!
Sounds to me like you have a new comp coming to your neighborhood that will bring down the value of ALL homes in that area.
Welcome to the NEW world of real estate, 2008 version!!
With auctions you typically have to put down 10% on the day of the auction and have 30 days to pay the remainder. That’s plenty of time for conventional financing. Aside from everything else, you may not get it at the price you want since it is an auction. The lease purchase idea sounds nice but is very risky for the actual buyer. I could see all kinds of things going wrong with that. I would require a big down payment up front in case you decided to back out once I bought it, which would be refunded if the house wasn’t purchased.
Not always. In Duval County, Florida you have to put down 5% at the close of auction and the remainder by the close of business same day!
Don’t forget that the auctioneer’s fee (could be 10%) is usually paid by the buyer. The conditions of sale should be stated on the auction announcement and will tell you how much down, how long to pay the balance, and the auction premium that will be added to the final bid price.
I had forgotten about checking on the auctioneer’s fee. Thanks for the reminder. Here in Utah, you have to put up $5000 just to bid. The remainder is required within 24 hours and/or noon of the next day or you lose the $5000. There will be no 30 days for me on this one. chuckle
The reason why my current home hasn’t sold is that we’re currently working on finishing the basement. We are at the drywall stage and only have carpet and painting after that. At our current speed, I project to have it fully finished basement before the end of August. At that point, my current home will become a 5 Bdr, 3ba home - up from the 3/2 it is now. With new paint and carpet (in the basement). Bonus! :biggrin My wife pulled comps on our house at low $260’s, and that’s what we were expecting. We have held off on listing it till its 5/3 so we can sell it in that status. As I stated in my first post, the auction house will sell easily at $260’s. If I want to hold out for more, it should sell easily enough in the $280’s. Even more when I finish the basement on it just like what I did with my current home. It could be a 6/3 1/2 at that point.
The majority of auctions here in Utah have ended up being bought by the lender. I’ve seen the results of the trustee lists. Then the lender will hire a real-estate agent to sell. We all know the routine. That will be at least 1-3 months before that other house even gets on the market, so I have that small time-frame to get my house sold.
The reason why the auction is so low is because it is only auctioning the 1st position plus attorney’s fees and an HOA lein. I think I found the actual owner and am planning on contacting him today to try to buy directly from him on short-sale. I’m really tempted to pick this house up via a hard-money lender.
Call some CPA’s in the area and ask do they have any clients that invest in real estate and you could offer them a 7% return on investment. That’s more than they’re making on a bank C.D or savings acct.
I did not realize that you were referring to a foreclosure auction. I thought you were talking about a private auction.
In a foreclosure auction, the cost of the auction is added to the foreclosing lien amount. The auction may generate enough revenue to pay everything, otherwise, the lender can always seek a deficiency judgment against the defaulting debtor to collect the balance.
Yes, this is a foreclosure auction. I’ve come to discover that it was listed about 4 months ago, but the realtor didn’t get things done that well and the buyers didn’t want to wait. Those buyers submitted an offer of $250,000, but they moved on to something else. The realtor gave up and just let the bank deal with it.