Mon. Aug 15th, 2022

Today I received an email with questions and concerns about a foreclosure sale. Excellent questions, so I decided to post both the question and my answer below.

What has your experience been with foreclosures?


I have a question for you, I am not new to real estate investing, but I am new to the foreclosure auction process …
There’s a property up for auction next month in our courthouse.

I have applied for prequalification with a standard bank lender, who will not close until repairs are made after an appraisal.

I have applied with a private lender who will not lend until they know about the repairs …


I have to bid without being seen! How can I get financing? I can bid and deposit a security deposit, but I can’t get out of pocket for repairs, etc.

Also, how do I evict people when I don’t own the house, if I win the bid and can’t evaluate the repairs until they are finished? Can’t get financing until I can get them out and evaluate the repairs? round and round …

Any advice would be helpful. Basically, you need to have 6 figures in cash to play these auctions …


Over the years, every home and every investor I know, buying at a foreclosure auction is one of the worst ways to buy. There are several reasons, including the ones you mentioned:

  • You cannot enter the house to assess what needs to be done because the bank is not yet the owner.
  • You have to work with a bank (the worst) and the rules are constantly changing and never in your favor.
  • Don’t buy anything a tenant has if you can help it. When a mortgage is foreclosed, homeowners are often furious and want to get it out of the bank, thus often destroying the property. Ultimately, that doesn’t hurt the bank, just the buyer. We bought one where the repossessed owners had poured sand down all the drains. There is no way to know in advance.
  • Altered bid periods
  • Most repossessed properties are retailed at auction.
  • By the time they get to the auction, the good guys are chosen.
  • There’s a very real reason why banks don’t want to lend you to buy these …

So my advice is to attend as many local investor meetings as you can to find properties to buy better than these auctions. If a house is decently priced in a decent area, we find that end-use buyers bid it retail, anyway. And, once your offer is approved, there is a 10-day “altered offer” period in which anyone else can come in and bid more.

There is nothing good about foreclosure auctions. How to do it? Whose. It is much better to let the mortgage foreclose and then buy from the listed real estate agent once you can review it.

What can you add? What has your experience been with bank foreclosures?

By admin

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