Home sale question - not sure I understand the situation

[S. Chris Webb]

If the flipper bought at the courtroom steps he had additional risks. For instance not seeing the inside and hidden damages, maybe he had to evict renters etc. Those added risks are the reason people don't bid as high at the steps of the courtroom (versus on MLS).

But interesting enough, many of the homes being sold on the courthouse steps these days are being sold for over market value ... and oftentimes more than they would have been sold for had they been on the MLS. Even the courthouse is a tidal wave of action right now. There are a lot of these "flips" being listed on the MLS and not selling, because the flipper expected to make a tidy profit by putting some minor improvements in. The flipper's biggest hope is that someone will come along, paying cash, and not understanding the market - the buyer will see a pretty house and pay for it. Either they have a buyer's agent that doesn't clue them in on the true value, they don't care if they are paying over market value because they feel there is still room for appreciation, or they don't have a buyer's agent at all and buying directly from the flipper. Too many times it's the latter case.

[MN-Born-n-Raised]

Originally Posted by S. Chris Webb

But interesting enough, many of the homes being sold on the courthouse steps these days are being sold for over market value ... and oftentimes more than they would have been sold for had they been on the MLS. Even the courthouse is a tidal wave of action right now. There are a lot of these "flips" being listed on the MLS and not selling, because the flipper expected to make a tidy profit by putting some minor improvements in. The flipper's biggest hope is that someone will come along, paying cash, and not understanding the market - the buyer will see a pretty house and pay for it. Either they have a buyer's agent that doesn't clue them in on the true value, they don't care if they are paying over market value because they feel there is still room for appreciation, or they don't have a buyer's agent at all and buying directly from the flipper. Too many times it's the latter case.

Haha. I'm not surprised. Whenever a group of people get into an auction situation, there is a tendency for people to overpay. You see it on Ebay all the time.

I remember going to an auction of 5 lake homes and tons of really nice, newer stuff. The guy had a $40M ponzi scheme and went to jail. There were around five, 1 year old snowmobiles, four or five beautuful 1 year old jet ski's, pinball machines, a bowling alley in a pole barn with a malt shop, etc. I had the list a week before and I studied the market value of about 150 really cool items.

At auction time the place was PACKED! The auction was tied into the internet and TON's of people from around the country were watching the feed. Every single item I wanted went for close to retail. Some went for more money than it cost to buy new. I remember twenty, 32" flat panels going for around $300-$350 each time they went up for bid. I could have went to Costco and showed them a much better ones for less. A treadmill went for $100 more than you could buy it new. I met the furniture maker who make the log beds at the auction. I later bought items from him for less than they sold at auction.

So I can certainly agree that if the Courtroom steps has a bunch of uneducated buyers, they will certainly overpay.

That said, when prices were still dropping, the courthouse contained savvy sharks. People were picking up incredible steals. I was looking at the mountains of sold data. But as I said they had their risks. I wasn't going to buy something that I could not walk in or run into a squatter when I opened the front door who decides to ruin the interior etc.

[S. Chris Webb]

"That said, when prices were still dropping, the courthouse contained savvy sharks. People were picking up incredible steals. I was looking at the mountains of sold data. But as I said they had their risks. I wasn't going to buy something that I could not walk in or run into a squatter when I opened the front door who decides to ruin the interior etc."

That's very true. Those sharks are very savvy indeed. So savvy that an outsider couldn't pick up a house there the way the sharks can. The sharks will smell the small fish and bid them out, so they get discouraged and don't come back. The sales were pretty much all picked up by a small group of professionals. Not sure if that's still going on so much these days - I heard a couple of these companies were being investigated for something like market rigging or something - and not so sure there are too many good homes coming onto the trustee market. The foreclosing banks seem to have gotten into the flipping game themselves.