What Really Happens at the Maricopa County Public Auction?
It’s just another day at the steps of the Maricopa County Courthouse located at 201 W. Jefferson St. in Phoenix, AZ. The third session of the trustee sale also known as the public auction starts at 2 p.m. About a dozen investors wearing shorts, t-shirts, tennis shoes, flip flops and baseball caps gather around the youthful-looking auctioneer seated at the corner of the outdoor courtyard of the Maricopa County Courthouse building. For the first 20 minutes, the auctioneer announces any postponement or cancellations on 128 homes listed for auction at the 2 p.m. session. Two earlier sessions were conducted at 10 a.m. and 12 noon.
Once this is cleared, he opens the bid for each house on the list. A majority of the bidders are wholesale investors bidding for their company or bidding for a client. Out of 200 homes auctioned at the 10 a.m. and 12 noon sessions, eight of them actually sold. That would mean that 96% of the homes went back to the bank. The reason for the few sales is the high starting bids. Despite headlines of the slumping housing market and increased foreclosure rate, the banks still don’t get the idea.
There is an average of 400 homes listed for auction everyday and about 96% of them end up as REOs/bank-owned.
Below are FAQ about the Trustee Sale or Public Auction:
1. Where and when does the public auction take place?
Every weekday at the steps of the Maricopa County Courthouse, located at 201 W. Jefferson St. in Phoenix. There are three sessions held at 10 a.m., 12 noon and 2 p.m.
2. Who can bid at the public auction?
Anyone who has a $10,000 cashiers check is qualified to bid.
3. What if I win the bid?
Your $10,000 cashiers check will be withheld. The remaining balance is due no later than 5 p.m. the next business day. If you are not able to pay in full within the timeframe given, you will lose your $10,000 cashiers check and may be barred from future participation in the public auction.
4. What is the starting bid?
The bank decides what the starting bid is at a price they think is fair.
5. What should I do if I’m interested to bid in a public auction?
– Conduct a due diligence review on the property you would like to bid on. Do a drive-by of the property, conduct a CMA. Know as much as you can about the property you’re interested in. Postponement and cancellations are announced minutes prior to the auction. Check frequently on the most current status of the property of interest to you.
– Structure your financing through a hard money lender before hand (regular banks don’t loan for properties bought in a trustee sale).
– Plan your investment strategy before securing a loan. E.g., how much money do you have for repairs, what is your holding cost, maintenance cost, tax liabilities, etc.
– What is your exit strategy if things don’t go as planned?
6. Is this the best way to snatch up great deals?
In my opinion, buying an Bank-owned property is a better way to go. It is less complicated, easier and can offer you bigger savings. Once a home is bank-owned, banks are more desperate to get rid of the home because they have held the property for so long (at least nine months without seeing a penny). Also, according to mortgage financier Freddie Mac, the typical foreclosure cost is nearly $60,000. The banks lose around 20% to 25% of the loan’s value on a foreclosure. On top of this, REO (real estate owned) or bank-owned homes are available for showings unlike those homes in the public auction. As a buyer, you are able to see the condition of the home and also inspect the home prior to closing a deal. In a public auction, you buy the property site unseen without inspection in most cases. There is a bigger risk involved in purchasing homes at the trustee sale that may cost you sleepless nights.
7. If it’s too risky to purchase a home at a Trustee sale, why do investors do it?
A buyer can purchase a home quickly (within 48 hours) at a trustee sale. Whereas, it takes an average of 30 days for an REO or traditional real estate sale to close. If you do your research and due dilligence well, you’ll find some great deals at the public auction.
8. How do I learn more about the public auction process?
You are invited to a FREE Foreclosure seminar on Saturday, October 18, 2008 at 10 a.m. at the Moon Valley Country Club.
151 West Moon Valley Drive, Phoenix, AZ 85023
RSVP to Guarantee Seating@www.bidazforeclosures.com or by phone at 602.229.1200 or email email@example.com