Are Real Estate Auctions a Good Deal vs Short Sales and Foreclosures (Tampa: tax lien, for sale)

[Tampasteve]

With all of the hype and all of the opportunities for real estate deals, I have recently been on a personal mission to find a piece of investment real estate. As a result, I have spend a lot of time researching properties to find a "good deal"

My two recent attempts to get a deal made me think that maybe there are better deals in the foreclosure and short sale market, more so than an auction.

Here is what I experienced:

I recently attended the Signature building in downtown St. Petersburg auction, where it was advertised and promoted that you could get 50% off the previously advertised prices. Signature is a very impressive downtown condo project that offers a unique design and incredible views. We had set our bidding limit for a high unit with South facing Tampa Bay waterfront views at $310K, vs a minimum bid of $220K for a two bedroom. Auction day came and we watched the frenzy as hundreds of bidders quickly passed our minimum bid within minutes. The worst part was that we researched each unit extensively to see which were the best units. The amazing part was that some of the worse units went for more than some of the best because people got caught up in the frenzy. After that experience, we we contacted to buy at the Auction prices,,,.

Our second attempt at a deal was a beach front condo in the other side of Florida on Auction.com where we bid up to a certain point and also researched the property. The bids came in and quickly surpassed the price that unit had sold for the previous year.

Bottom line is make sure you research the properties that you interested in. Make sure you evaluate the purchase history to see if you really are getting a good deal. Short sales and foreclosures may take longer, but may be a better way to get a great investment real estate deal.

Anyone else seen great deals from some of these Auctions?

[Ga Jerk]

Why do short sales & foreclosures sales take so long in Florida(I've seen the reference on several Florida sub forums)?
In my experience in Georgia (I'm a homebuilder that is in the same boat as many other homebuilders), folks are able to get a 24 hour answer on a short sale or foreclosure contract.
I had a 24 unit condo building for sale and I could get an answer on a contract in 5 minutes. The same with any of the single family homes I have for sale. I would get the contract in hand and call the banker. Yea or nae right on the phone.

[bentlebee]

I have heard auction horrors and probably due what you decribe...people get caught up in the action and the moment and later realize they inherit all the liens

Across from me is a house which was owned by a realtor who never paid a dime and also should never be a realtor due to her criminal record but that is a different story...

Now an investor thought he bought a great deal buying the home for $ 25K and paying $ 1,500.- down...He is now trying to ge tout of paying the additional money but legally he has no chance...He is stuck with property tax liens, HOA lien, Mortgage lien...Good Luck with a home like that and I didn't even start to mention that the realtor's dogs were not potty trained, and all appliances and G_D knows what else is taken from the home...the only thing looking good is the yard since they tried to keep up the appearence of being good people who could afford the Mercedes, etc...just mowing your yard isn't fooling your neighbors

[housingcrashsurvivor]

Never bought one by auction but Southeby's once tried to get me to sell by auction. I listened to their sales pitch, thought it a scam and declined. This was earlier on in the crash. Turned out the auction was a complete disaster. Sellers lost a ton of money paid up front to participate. Was supposed to be an all day event but it closed early due to lack of interest. Very glad I had nothing to do with it and that sort of colored my perception of auctions badly.

I don't even take small purchases lightly. I won't even impulse buy a shirt. Making a hasty decision on such large sums of money? Crazy.

[TampaKaren]

I agree with you, Steve. By the time the buyer's premium is added plus the buyer has to pay all fees, doc stamps, back taxes, cure liens, title defects, etc., there are usually better/cheaper options in the foreclosure & short sale markets (if you have the time and patience). I have seen some good deals though where investors bought in bulk.

I, too, watched in disbelief at the pirana buying frenzy at Kensington Park SoHo. I guess an elevator in a townhouse can do that. Buyers laid out too much cash for (IMO) an inferior product.

[FloridaKash]

Can someone explain exactly how short sales work? From what I understand they are homes that banks are willing to sell for less than what is owed on the old mortgage, usually resulting in a lower price for the new buyer. Now, I hear that there could be liens and other debts that the new buyer would have to pay. How much could these liens be? Are we talking a few grand or tens of thousands? Is there anyway on getting out of paying those liens?

[Pragmaticus]

Originally Posted by AlaskaKash

Can someone explain exactly how short sales work? From what I understand they are homes that banks are willing to sell for less than what is owed on the old mortgage, usually resulting in a lower price for the new buyer. Now, I hear that there could be liens and other debts that the new buyer would have to pay. How much could these liens be? Are we talking a few grand or tens of thousands? Is there anyway on getting out of paying those liens?

If you go to the real estate portion of this forum and search there are tones of info in this.

In a nut shell, owner is unable to pay the mortgage obligation.

Can't sell without taking a lose and they don't have money to cover the difference

They list the house supposedly at market price (which is below what is owed) and wait a for a buyer.

Buyer comes along and offer to buy. Seller accept the offer and send it to the bank to SEE if the bank would accept to settle for less than that's owed.

Bank checks the condition of the seller (usually through what is called a financial hardship package) and do their own assessment of the value of house (called a Broker Price Opinion, BPO) and may or may not negotiate the price

And then accept. There you go..

There are different flavor to this that would depend on case by case. For example, if there is mortgage inssurance, if there is a second lender, or other liens in the house.

Each step takes quite some time. That's why buying short sale may be a long process. Depending on where you enter in the above process as well as how smooth is the specific situation, you may close fast. The key to short sale success is doing your research well and not spending time on some that are just a joke. For example, those whoo pull list price from thin air just so that there are bidders when knowing that bank is not going to accept it. Just because they want to sell short doesn't necessarily is good value for the bank. Those that has a mortgage inssurance, those that has more than one lender appears to take a long time.

Hope it helps.

[bentlebee]

Originally Posted by MeInDenudinFL

The key to short sale success is doing your research well and not spending time on some that are just a joke. For example, those whoo pull list price from thin air just so that there are bidders when knowing that bank is not going to accept it. Just because they want to sell short doesn't necessarily is good value for the bank. Those that has a mortgage inssurance, those that has more than one lender appears to take a long time.

Hope it helps.

There are indeed realtors out there who try a new way of advertising...Take a listing that is so bizar low and never will be accepted by the bank...but that way the realtor has a lead (client) who is looking for a deal and they can try to get them to make an offer on a different home...Don't fall for this bad way of getting clients through the door. If a professional does something like this, to me they are a no good realtor and doesn't have the best interest of the person in financial trouble in mind and neither the best interest of the buyer....I call them donut eating lazy realtors who try to get an easy client who has no experience...move on and go to a listing that is realistic and has a better realtor listing it.

[TampaKaren]

^^ I would never nor have I ever done this (but I know who does). I do like donuts, though . One additional thought about this tactic is that should the lender accept the contract price, the sale will lower the comps for the rest of the neighborhood. Nothing good about this at all IMO.

[algia]

I don't know that it is.......I recently had a photoshoot @ a condo in St Pete and the auction started at $300,000 for a 1000 square foot tiny place!!!!! I have to assume (HOPE) they are not ALL like that........