My morning at the Foreclosure Auction
I was up bright and early go bid on a property at a trustee sale yesterday. It was a 9:00 AM sale so I wanted to make sure I got there on time. What typically happens is the trustee will call out all the postponements first & that usually burns up plenty of time, then 20 to 30 minutes later or more they call out the properties going to sale . This was deja vu for me. I was an active bidder at the courthouse steps when I was just a kid in college. I worked for a group of savvy investors who bought a ton of property at those auctions in the late 80′s & early 90′s. Although I have been to many more foreclosure sales in the past decade, I am not even close to being as active as I was in the past. Watching the drama & adrenalin rush is always entertaining. In fact, I saw a multi-million dollar commercial property go to sale for 1.8 million that morning. That is far from typical. I am used to seeing low to mid range houses go to sale all day long with furious bidding. It was a real treat to see some major players stepping up & bidding on some commercial in the figure range. I figure that property is worth maybe $2m to $2.1m fully leased up. The would be some cost for TI (tenant improvement) the final winning bid was $1.6 million (no I didn’t buy it).
so maybe that could get 200k-250k profit at the end of the day if all goes smoothly.
The usually shenanigans were going on in the background, one bidder saying “hey why don’t you cool off & not bid so high so everyone can get their share. Let’s work together.” ( gee, do you think it’s illegal to collude at an auction?) “Hey back off, man, I get what one measly house to your ten” This was from the guy that just bought the house at a price that seemed a bit skinny.
The good news (I guess) is that at this particular auction, there were about 10 people who showed up & 6 of them were serious bidders & I recognized 2 big “Gorillas” companies that have raised a ton of capital & buying houses like it’s going out of style.
There used to be a lot of amateurs at the auctions, I mean 40 to 50 people screaming their bids to get them in & bidding way to high, many times over the retail price.
This could be a sign that the pro’s will rule the roost once more, at least for the time being.
Most of the loans going to sale were originated in 2006, 07 & 08. with the lenders dropping the bid lower that what is owed. (aka specified bid). These guys/sharks are on top of their game equipped with dark glasses, ipads & bluetooth earpieces (picture the world series of poker, with tablets & cellphones, outdoors on a cold rainy day)
