Banks use the bidding process to sell inventory of properties that have not been sold by short sales or auctions.
In the real estate industry many investors are familiar with bank owned property lists or bank tapes. In most cases they are pitched by people who say they are direct contact with the banks which is often not true. Investors can spend a lot of time chasing deals to then find the source is not in a position to facilitate a bid or worse the list is out of date.
Our partner receives bank owned property lists directly from the banks, uses an escrow agent for handling the money for those investors placing bids. Our partner also bids many millions of dollars each month on properties for his own company. He has a large group of investors who buy homes that have been awarded. Why to these investors like these homes? Because my partner is getting them at deeper discounts than most because of the huge volume he buys.
Additional Information for Investors in Bank Owned Properties That Are Listed For Bid Each Month
1. Monthly Nationwide Bank Owned List: This list is distributed to investors on or about the 2nd day of the beginning of each month. Investors decide on which properties they want to bid and submit that through me if the bid is for a small number of properties. If the investor is a “deep pocket” buyer (with resources and intent on buying a portfolio of 10 or more houses then I will connect that investor directly with my partner who will guide them on the bids most likely to be successful and the deposit required to proceed.
Key to successful bidding: a common mistake is thinking 40-60% of the bank list price will win the bid. This can be true but can also mean you lose on a very good deal. The recommended approach is for you to determine the value to you of a winning bid and then place the bid so you can make your targeted profit. Example of a flip: List Price $80,000 Estimated Repairs $10,000 ARV $120,000 Target Profit 15% You might decide to bid $70,000 or higher.
2. Requesting a Specialized List ( For Deep Pocket Investors Only): We recently were on a conference call with a buyer for Southern California homes at higher prices points than what is typically found on the monthly list. My partner is working with them to clearly define their buying criteria and request as specialized list from the banks.
3. Exist Strategy for Properties An Investor Decides They Don’t Want : If an investor decides they do not want one or more properties that they were awarded in the bidding process there are two ways those properties can be sold. First they will be offered to the large group of investors wanting awarded properties. Should they not be sold that way, the homes will be marketed on the company’s buy here pay here site. This virtually eliminates the risk of an investor being stuck with something they do not want. However for this process to work the investor must be working with us and following our bidding advice
Frequently Asked Questions
Q. What is the bidding process?
A. Once the list is distributed there are 7 -9 days generally to submit a bid. During this time an investor does due diligence on the property to determine what work might be needed and market value after repair. We also recommend calling the county clerk to check on tax liens which are not common but can occur. To place a bid, normally 50% of the bid amount plus the processing fee needs to be wired to escrow. A lessor amount can be negotiated if bidding more than $100,000. If the bid is won, the remaining bid amount is due within 24 hours. If the remaining money is not wired you will forfeit your deposit as the house still must be purchased. So be sure before you bid you can fund the entire amount if awarded.
Q. Do the properties come with clear title?
A. Once a bid is awarded we recommend have a title company issue a warranty deed.
Q How Do I get the monthly list?
A Send and email with “Add To Bank Owned List” in the subject line. Click Here To Email in the email be sure to be clear as to what city is of interest. If you are interested in bidding $100,000 or more please call me direct