I enjoy reading the Success Stories on CRE Online, and I would like to share this one with the other readers. I track all the bank foreclosures in my area (Baltimore City) of which there are about 350-500 filed every month. Of these, only about 5-7% have enough equity to make them worth considering, which means about 18-35 per month. I wait until a day or two before the auction to make sure it is still on because most of these are canceled.
I end up looking at 2-4 properties per week and eliminate a few more at this stage because I don’t like the area or the house doesn’t have enough equity. My most recent purchase was a row house in a nice home-owner neighborhood with a slate roof and new windows. I put the value at $68-72,000. The next morning on the way to the auction, I was discussing the property and what we wanted to bid with a partner and we decided that the highest we wanted to go was $40,000.
When we arrived at the courthouse steps (Yes, these auctions are held outside ON the courthouse steps!), there were no other bidders. I like these kind of auctions. The auctioneer read off all the legal information and then the trustee, who represents the bank, opened the bidding at $40,000.
I was somewhat taken aback because the court records had indicated that the mortgage balance was only $34,000, so I said to the trustee “I thought the mortgage balance was only $34,000.” She looked through her papers and announced a new opening bid, $34,600, to which I quickly replied “$35,000” The auctioneer then said “Sold!”
I guess the moral of the story is it never hurts to ask because even though I was willing to pay $40,001 for the property, by asking one question, I saved/made $5,000. (Yes, I could have bid $34,601 and made another $399, but nobody’s perfect.) I hope this story encourages others to keep working to make their dreams come true.