You’ve read the books, you’ve watched a hundred “Fix & Flip” reality tv shows and you’re ready to dive into real estate investing. But where are the deals?
Best place to start your search – your local paper. Look in the classified section under Legal Notices and then Notice of Trustee Sales. Because bankruptcy filings and payments to stop a foreclosure can be accepted up to the last minute, we suggest only researching those properties that are one week or less out from the auction date. You don’t want to waste time on auctions a month out but you want enough time to pull title and do research. A good title company can pull in 24-72 hours with a cost around $100 – $300. If you are a repeat customers, you can probably negotiate a volume discount. So one week gives you enough time to research the property, make sure there is clean title (or verify order of liens) and get a cashier’s check made out to your name.
As an extra tip, get a few cashier’s checks such as one $10,000 and several $5,000 cashier checks. Most auctions require 10% of the bid amount and since the amount is unknown, you’ll be covered without putting down more than needed.
The next best thing you can do is locate the two or three main law firms handling the bulk of the trustee sales in your area. Drop by the courthouse during one auction and introduce yourself to the trustee – try to get his/her card. Calling for information on a trustee sale can be difficult without an inside contact. You can save yourself a lot of needless research time with a contact who can inform you when an auction has been canceled.
Where not to search – we’ve tested many websites like Realtytrac for our clients and found the key information to be wrong the majority of the time. The information we are referring to is the lien position (which loan is being foreclosed on), auction date, status and the most absurd – opening bid. By law a trustee cannot advertise an opening bid before the auction and the amount is usually no where close to the loan amount these days.
Best advice we can give, drive down to your local court house to participate in an auction. Strike up a conversation with a few bidders and watch how they do it. You’ll learn more in one hour talking to pros at the courthouse than one month reading a foreclosure auction book.