Video of a Courthouse Steps Foreclosure Auction
Category : Laguna Beach Real Estate
Everyone is intrigued with buying foreclosed properties and getting that ‘great deal’.
You’d think that the public auctions at the court house steps would offer the best opportunity for that awesome deal since it’s at the beginning of the ‘food chain’.
Unfortunately, like the rest of the market, deals are becoming increasingly scarce for investors.
Here is a behind the scenes video of an auction this week at the OC courthouse.
But first an overview of the process
Up to a couple of years ago there were just a handful of investors that bought properties auctioned at the courthouse steps. The reason for such a select number of investors was it took a lot of brass and know how in order to assume the risk of this investment. They’re putting up their cash for homes whose title might be unclear, tenants might have to be evicted, the inside of the house might be trashed, and the market might not go in the direction they hoped it would.
One rule of thumb was that an investor looked for deals at 75 cents on the dollar compared to ‘like’ homes in the area. This gave them room to fix it up and flip it for a profit.
Today the deals are at 95 cents on the dollar and they’re buying betting that the market values are going up.
Furthermore, the number of foreclosures coming on the market is way down. It appears banks are steering more people into short sales. But who knows. There’s been years of speculation of what is happening in the bank’s board rooms regarding distressed properties and still know one truly knows.
So times are tough for investors, with more competition, less profit margins and less properties to buy. Most properties are not bought at the auction and they go back to the bank that puts them on the market, using a realtor to market them.
And they have to work every day doing extensive research by driving by properties, checking titles, determining market values and much, much more.
The following is a quick narrative of the video
As you can see in the video the handful of investors has risen over the last couple years to about 30 or 40 investors of all different shape and sizes.
Step 1: Announcement of cancelled or postponed property auctions
The original list of homes that were supposed to be auction is cut down substantially due to cancellations or postponements. Many times this is due to a request for more time to do a short sale and the bank will retract or postpone the distressed property from the auction.
It took about 15 minutes to read the list of houses being removed.
Step 2: Bidders must show cashier checks to be approved for bidding.
If they win the bid they endorse the checks and the house is theirs
Step 3: First home is auctioned and bought with no other bidding
Followed by fierce bidding for another house
The bidding went on for 8 minutes with 3 bidders going up in $100 increments. One of the bidder’s bids was not heard at the end and the auctioneer said ‘tough luck’ and they moved on to the next house.
I want to thank Valerie Ventura and her dad, Danny, one of those long time investors, for allowing me to join them and explaining the process. I help them research the value of the houses going to auction and list the house when it goes on the market in this area.