How to Buy a Home for $101 – REALLY!!!Posted on March 5, 2011 by
There Kim and I were, standing in front of the Bartow County Courthouse in Cartersville, Georgia, at the December 2010 foreclosure auction – freezing our tails off. We’ve been working the monthly foreclosure market since 1995.
Cheryl Bagby, the young lady who cries the foreclosures for McCalla Raymer, the largest foreclosing attorney in the southeast, had just finished reading the legal notice for a home in Acworth, Georgia.
It was a nice 3-bedroom, 2-bath home in a great location on about an acre of land. The home was rented to a tenant who was paying rent of $795 per month.
When Cheryl finished reading the legal, she said, “The opening bid for this property is $100. Are there any other bids? Going once, going twice….” What happened next will blow your mind! But you’ll have to read along a little further if you want to know how this story ends.
Lots of folks assume, because of tanking real estate values and the skyrocketing number of foreclosures, that auctions are packed with investors clamoring to bid on incredible deals. Maybe that’s true in Fulton and Cobb County, but in lil’ ol’ Bartow, usually it’s just me and Kim and maybe one or two other investors.
Why aren’t more investors there bidding? In Georgia, if you are the high bidder, you must immediately pay for the property in full with either cash or certified funds. There’s no, “Let me run up to the bank,” or “Let me put 10% down.” It’s a cash-on-the-barrelhead purchase.
Because banks no longer lend to investors, investors can no longer borrow the needed purchase money to buy at the foreclosure auction, so most investors just stay home.
Are there good deals to be had on the steps? You bettcha! In December, of the 104 properties that were cried, lenders shorted (the opening bid was at least 25% below what was owed on the property) 30 homes. Some of the 30 were shorted more than 50%!
Are foreclosures starting to ease up? Not hardly! In 2010, in Bartow County, 2,321 properties were advertised for foreclosure, 1,014 were cried, 27 were bought on the steps, 988 went back to the lenders, and 287 were shorted.
Sadly, the numbers will continue to climb in 2011.
Can anybody buy at the foreclosure auction? If you have the money, yes. But – and this is a BIG but – you had better know what you are doing! Where do you learn about buying foreclosures? The best place is at your local real estate investors association.
Now back to Cheryl: She cried, “The opening bid is $100. Going once, going twice…” then Kim and I chirped in, “We bid $101.” There was one other couple on the steps. They didn’t bid. They just stood there. We don’t know why.
With that, Cheryl cried, “With no other bids, the property is sold for $101. Let’s settle up.”
And just like that, we bought an investment property for $101 that cash flows $795 per month.
Now do you think real estate investing is worth learning about?