My Auction Experience

[Andy R]

So I am back in Texas and looking around at homes. I attended an auction today on the steps of the Ft. Worth court house because a home I am interested in (listed with a Realtor) was supposed to be auctioned. It was quite an interesting experience with the auction happening right on the steps of the County Clerks office in a very informal way.

Unfortunately the house I was interested in bidding on was never put on auction. I called the trustee of the note after the sale to ask why it was pulled and she said the owner of the home filed bankruptcy last week. That prevented the sale of the home at auction today.

So I have a new idea on how to try and leverage the current situation but not sure it's worth my time. I was thinking about contacting the owner of the mortgage note for the house and seeing if they wanted to sell the note to me. The idea would be that I could probably get a big discount from the current owner of the note and then I could attend the bankruptcy trial to make a claim on the house.

It appears the owner just got divorced and his kids recently left for college (now an empty nester). He has the house on the market and it appears he is not planning to stay in the house as he is packing things up and slowly moving out. That signals to me that he is either going to default on the note or hopes to sell it in the next few months. If I can buy the note for $.50 on the dollar and he sells the house and can pay back the note I will double my investment. If he does not find a buyer I will be first in line to take ownership of the house.

This idea is pretty aggressive and probably full of potential risk I am not thinking of. I was hoping the wise members of E-R.org can help me understand if this is a totally stupid idea or if I should spend some time to look deeper into this option? Any advice or past experience regarding similar issues is much appreciated!

[OAG]

Quote:

Originally Posted by Andy R So I am back in Texas and looking around at homes. I attended an auction today on the steps of the Ft. Worth court house because a home I am interested in (listed with a Realtor) was supposed to be auctioned. It was quite an interesting experience with the auction happening right on the steps of the County Clerks office in a very informal way. Unfortunately the house I was interested in bidding on was never put on auction. I called the trustee of the note after the sale to ask why it was pulled and she said the owner of the home filed bankruptcy last week. That prevented the sale of the home at auction today. So I have a new idea on how to try and leverage the current situation but not sure it's worth my time. I was thinking about contacting the owner of the mortgage note for the house and seeing if they wanted to sell the note to me. The idea would be that I could probably get a big discount from the current owner of the note and then I could attend the bankruptcy trial to make a claim on the house. It appears the owner just got divorced and his kids recently left for college (now an empty nester). He has the house on the market and it appears he is not planning to stay in the house as he is packing things up and slowly moving out. That signals to me that he is either going to default on the note or hopes to sell it in the next few months. If I can buy the note for $.50 on the dollar and he sells the house and can pay back the note I will double my investment. If he does not find a buyer I will be first in line to take ownership of the house. This idea is pretty aggressive and probably full of potential risk I am not thinking of. I was hoping the wise members of E-R.org can help me understand if this is a totally stupid idea or if I should spend some time to look deeper into this option? Any advice or past experience regarding similar issues is much appreciated!

I would fear priority liens - like County RE liens and or Federal Tax liens - not sure but would think that there are others that would survive the court house steps sale. Can you do a title search to determine that? You may be biting off more that you want to chew, but it would be interesting to read your "real life" experiences on your first one. BTW I did buy a adjoining street on a commercial property one time on the court house steps - I did use an Attorney to do the title search and make sure the $700 I paid for the 1/8 of a mile street and entrance to the property was all it would cost (plus the Attorney fee). Worked out fine as I wound up selling it year or two later for over $10.5K (without the attorney).

[Texarkandy]

Quote:

Originally Posted by Andy R So I am back in Texas and looking around at homes. ....... Any advice ............

Advice? Sure - Drive 180 miles east to Texarkana & buy my house!

(Ranked by Forbes mag as 2nd fastest growing small metro area in the US - two years in a row)



(edit: and, may i add, only a 4 hour drive to "Nawlins" & "Mahdi Grah" - 3 hours to Dallas - no repairs necessary, all remodeling done - pssst, low crime & no State income tax)

[W2R]

Quote:

Originally Posted by Texarkandy Advice? Sure - Drive 180 miles east to Texarkana & buy my house! (Ranked by Forbes mag as 2nd fastest growing small metro area in the US - two years in a row)

Or buy my house instead, in exciting, mysterious New Orleans, and always have a place to stay for Mardi Gras! And I PROMISE I will get all those repairs done before we close. Honestly.

[haha]

Quote:

Originally Posted by Texarkandy Advice? Sure - Drive 180 miles east to Texarkana & buy my house! (Ranked by Forbes mag as 2nd fastest growing small metro area in the US - two years in a row) (edit: and, may i add, only a 4 hour drive to "Nawlins" & "Mahdi Grah" - 3 hours to Dallas - no repairs necessary, all remodeling done - pssst, low crime & no State income tax)

Plus, some of the best beef barbecue in the entire world.

Ha

[W2R]

Quote:

Originally Posted by Texarkandy Advice? Sure - Drive 180 miles east to Texarkana & buy my house! (Ranked by Forbes mag as 2nd fastest growing small metro area in the US - two years in a row) (edit: and, may i add, only a 4 hour drive to "Nawlins" & "Mahdi Grah" - 3 hours to Dallas - no repairs necessary, all remodeling done - pssst, low crime & no State income tax)

Well, you got me beat, there. Guess I'll throw in the towel.

[unclemick]

Quote:

Originally Posted by Want2retire Well, you got me beat, there. Guess I'll throw in the towel.

Yeah but - do they still have those late night tv ads where they mis-pronounce Metaire?

heh heh heh -

[W2R]

Quote:

Originally Posted by unclemick Yeah but - do they still have those late night tv ads where they mis-pronounce Metaire? heh heh heh -

Yes, every ad that is made out of the area has a problem with the pronunciation of my suburb, Metairie. I sort of like the way our local cab company handles the problem... they are named "Metry Cabs".

[Martha]

I am aware of some people who buy mortgage loans from lenders when the borrower is in bankruptcy or the house is in foreclosure.

When there is no equity in the house the bankruptcy trustee generally abandons any interest in the property. This means that it goes back to the debtor. If legal in Texas, at that point you could get a deed in lieu from the debtor. However, if there are liens you need to foreclose out, you will have to wait until the debtor gets his bankruptcy discharge to do the foreclosure or you would have to make a motion to the bankruptcy court asking for relief to start foreclosure immediately.

Bankruptcy trustees do have the power to do a sale free and clear of liens and then take the money and pay lien holders. There is no real interest in them doing that if there is no equity in the property for general creditors to get.

See my signature.

[honobob]

Quote:

Originally Posted by Andy R If I can buy the note for $.50 on the dollar and he sells the house and can pay back the note I will double my investment.

Dude, if you could buy the note for $.25 on the dollar you could quadruple your investment! Where did you get your figure of $.50 on the dollar? Is this just wishful thinking?

Anyway, why do you want to buy in Fort Worth which has had only 3.63% appreciation over the last 18 years? Adrian, Texas appreciated 24.16% each year over that same time. The other high appreciation cities (DOUBLE DIGIT) in Texas are Marathon. Channing, Moran, Cransfills Gap, New Castle, Sanford, Florence, Linn and Kemah. Aren't any of those places acceptable to you?

Good luck but do be cautious bargain hunting, you might get more than you bargained for as others have pointed out.

[Andy R]

Thanks for all the info. It sounds too complex and most importantly "I don't understand all the risks". That means it's something I am not going to do. Hogs get slaughtered and pigs live another day so instead of looking for the uber deal I am just going to look for a good deal...

[W2R]

Quote:

Originally Posted by Andy R Thanks for all the info. It sounds too complex and most importantly "I don't understand all the risks". That means it's something I am not going to do. Hogs get slaughtered and pigs live another day so instead of looking for the uber deal I am just going to look for a good deal...

Wise decision, Andy! What you were talking about doing sounded pretty hair-raising to me. It sounds to me like you are well in touch with your own risk tolerance.

[eridanus]

Quote:

Originally Posted by honobob Anyway, why do you want to buy in Fort Worth which has had only 3.63% appreciation over the last 18 years? Adrian, Texas appreciated 24.16% each year over that same time. The other high appreciation cities (DOUBLE DIGIT) in Texas are Marathon. Channing, Moran, Cransfills Gap, New Castle, Sanford, Florence, Linn and Kemah. Aren't any of those places acceptable to you?

You're kidding me. Adrian has a 10 block downtown. It's not exactly Fort Worth (or Lubbock, or Armadillo, or Texarkana). Same with most of those other towns (the ones I recognize).

[honobob]

Quote:

Originally Posted by eridanus You're kidding me. Adrian has a 10 block downtown. It's not exactly Fort Worth (or Lubbock, or Armadillo, or Texarkana). Same with most of those other towns (the ones I recognize).

Well pardner, I thought we wuz tryan to make some money. How 'bout Blum TX 18 years of annual 10.63% appreciation or Richardson (14th St.) at 10.62% or even Coppell at 10.56%. Close enough to Fort Worth for ya?

Ya want some BBQ with that?

4% appreciation My *ss!

[eridanus]

Quote:

Originally Posted by honobob Well pardner, I thought we wuz tryan to make some money.

I don't know if he's looking for an investment or for a home. If a home, Richardson or Coppell might work, since they're in the greater Dallas area (though still have a different feel to them than Fort Worth).

[honobob]

Quote:

Originally Posted by eridanus I don't know if he's looking for an investment or for a home. If a home, Richardson or Coppell might work, since they're in the greater Dallas area (though still have a different feel to them than Fort Worth).

How about a home that WORKS like an investment? You want closer to Dallas? Try McKinney, 18 years of double digit appreciation AND an increase over the last 12 months of 9.23%, So if everybody's down 30% does that make them UP 39.23%? YeeHaw!

[Bestwifeever]

Andy, DS loves Fort Worth--he may end up there too.

But aren't there homes in the area you could buy that are also great bargains but whose purchase won't require legal hoop jumping and possible pitfalls down the road?

[tryan]

If it's auction property you want ... try these:

Foreclosed Properties: Buying Foreclosed Home, Properties & Foreclosed Home Listing For Sale

If you pay 50 cents on the dollar for these ... you paid WAY too much in my book. TX auctions scheduled for Jan 10 and Fed 21.

FWIW, I just registered to bid online. Process requires a creditcard which is billed only for the deposit IF your bid is accepted. Still a tad early IMHO; banks are still holding a reserve price. Absolute auctions are the way to go (or borrow Hono's crystal ball and hope for the best)!

[kyounge1956]

Quote:

Originally Posted by tryan If it's auction property you want ... try these: Foreclosed Properties: Buying Foreclosed Home, Properties & Foreclosed Home Listing For Sale If you pay 50 cents on the dollar for these ... you paid WAY too much in my book. (snip)

Yup. The "previously valued at..." amounts come from the higher of three or four possibilities, one of which is the appraisal for the most recent mortgage. I daresay a sizeable fraction of those most recent mortgages were "upside down".

Alas, I couldn't find the ability to search for houses by location. The "notify me" email tells you where the auction is, not where the houses are.

[tryan]

Quote:

The "previously valued at..." amounts come from the higher of three or four possibilities, one of which is the appraisal for the most recent mortgage.

Yeah ... I couldn't substantiate any of the numbers in thier spreadsheet via the registry of deeds. All the more reason to use rental cashflow as your guide.

FWIW, I bought a half dozen property at RTC auctions in the early 90's for 10-25 cents on the dollar. I fully expect this mess will result in similar deals. But WHEN is anybody's guess. The feds "bailout" promises have delayed the healing IMO.