Access Wealth Strategies

There has been much hype about buying foreclosed properties in mainstream media and on the internet. You may be wondering:

What is it really like bidding at the foreclosure auction? Are there good deals to be had? What does it take to get a good deal?

Last week I interviewed John Ray, owner of a foreclosure auction bidding service firm located in Phoenix, AZ. John has been in real estate for 20 years and is a wealth of knowledge when it comes to bidding on foreclosed properties at the trustee sale auction.

John’s company BidAZForeclosures.com has been bidding at Maricopa county foreclosure auctions on behalf of investors for 7 years, currently buys about 100 properties a month, and is one of the largest bidding groups.

This interview lasted over 30 minutes; it has been captured on video and edited into 4 parts. It is well worth your time to watch all 4 parts because you’ll learn John’s insider perspective on getting a good deal at the foreclosure auction and how to avoid common mistakes investors make.

Topics Covered in Part 1 of This Interview

• Are there good deals at auction?
• How many properties are bought at the auction?

Overview of the foreclosure auction process:

• How do properties end up at foreclosure auction?
• Why do some foreclosures get postponed?
• How does the bank establish the opening bid?
• What is a “total debt” bid vs. a “specified” bid?
• What really happens at the trustee sale?
• What happens after you win a bid?
• How do you get title to the property?
• How do you take posession of the property?

Topics Covered in Part 2 of This Interview

• How does the current market cycle compare to the previous one?
• What’s happening with bank REO properties?
• Why aren’t banks doing more short sales?
• How do you buy properties at auction?
• Why do investors use your bidding service?
• How risky is it?
• What are some common mistakes?
• What due diligence do you do before bidding on a property?
• What happens when you make a mistake?

Topics Covered in Part 3 of This Interview

• Is there any truth to the “old boys network” that controls the auction?
• What is it like bidding at the auction (examples)?
• What is blind bidding?
• What are dropped bids vs. jumped bids?
• Where do you get the property listing info?
• How are you different from other bidding groups (examples)?

Topics Covered in Part 4 (Final Part) of This Interview

• How do new investors get started?
• What is the Jump Start program and how does it work?
• What are some common beginner mistakes and how do you avoid them?
• Do you really have to pay all cash at the auction?  Are there other options?
• What is “hard money” and why do people use it (examples)?
• How does an investor work with a bidding service like yours?
• How do we contact you for more information?

Please let us know what you think of the interview, whether you love it or hate it, by leaving a comment. If you enjoyed this interview, please rate the videos on YouTube as well.  Thank you in advance for your feedback!

If you’d like to see a video of live bidding at the Phoenix (Maricopa County) trustee sale auction, see my prior post:
Phoenix Foreclosure – Video of Live Auction at Trustee Sale

I visited a live trustee sale auction at the courthouse steps in downtown Phoenix where the bank trustees auction off foreclosed properties to the highest bidder.

See the video below for the live action at the trustee sale.

The video gives you a good idea of what goes on at a trustee sale auction. However, it was not as busy and chaotic as it could be. I will probably go back another day to get more “action shots” for you.

Let me know what you think or what else you’d like to see by commenting below.

A reader emailed us a question on how to get the list of homes to be sold at the trustee sale auction. I’ll answer that question in this post.

The first part of the answer is that it depends on where you are located. Each county has its own method of posting properties pending foreclosure. There are also different types of foreclosure, depending on the location and the instrument used to secure the property as collateral for a loan.

For the areas I am familiar with, foreclosures are listed by the trustee in a local newspaper prior to the property being sold at auction. The listing should include the property ID, date of the sale and the loan amount. Often the opening bid, set by the bank, is not released until a few hours before the sale takes place.

There are two common things which interfere with an investor buying a property at the trustee sale auction:

1. The sale often gets postponed.
2. The bank most of the time (80% to 99%) gets the property back because they are the highest bidder.

One other option to find out about soon-to-be-foreclosed properties is through list service providers. These are companies that will research the properties and sell that information to investors. One popular service here in Phoenix is Arizona Investors Alliance, also know as Bid AZ Foreclosures.

Watch the video below for my second visit to this upscale Desert Ridge home, as I tour the house and point out the changes made.

After Renovations

Before Renovations

For your reference, the “before” video (just 2 days after the home was purchased at the Phoenix trustee sale auction) below:

Ask yourself this question:

Would YOU buy this home for approximately half of its peak price at the trustee sale?

Related post: Real Estate Investors Turning to Trustee Sales for Bargain Purchases

When is the right time to buy an asset for investment purposes? This could the most important question an investor asks himself or herself.

There is not one right answer for everyone that applies at all times. Instead it takes judgment and applying core principles to answer this question.

The most successful passive investor of all time, Warren Buffett, provides a few guiding principles in answering the question, “When is the right time to buy an asset?”

Let’s take a look at a few of Buffett’s famous quotes.

“A public opinion poll is no substitute for thought.”

My transation: Just becuase something is popular doesn’t mean it is the best buy in the marketplace.

“The investor of today does not profit from yesterday’s growth.”

My Translation: If you buy an asset today you DON’T get the past profits, only the future profit from the investment.

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

My Translation: The best time to buy (or sell) is when everyone else is doing the opposite.

So, we see that from Warren Buffett’s perspective, the time to buy an asset might be when people think he’s crazy to do it.

Think back to fall 2008 when Warren Buffett made a multi-billion investment in both General Electric and Goldman Sachs. At the time the financial world almost failed, yet just over a year later he has a multi-billion dollar profit plus 10% preferred dividends while he waits. Not too shabby.

What do you think? Have you seen Buffett’s principles at work in your investing life? Or do you have a different way of timing your asset acquisition and how much success have you had? Please comment below and let us know.