Foreclosure Auction Flips in the News
This just in the paper today. Not the first time auction investors have gotten press. Check my recent blog and “” story too… This is all great timing for our new auction investors coming to our upcoming with Sarah Garlick. This is such a popular topic that Sarah is holding TWO Labs… her second one June 23-24 having a couple seats open. Call 800-310-7730 x2 for details if you want a piece of the auction pie. The deals are flying!!
Real estate scavengers flip foreclosed homes in Sacramento area Published Sunday, Jun. 12, 2011
As more Sacramento homes slip into foreclosure, scores of house “flippers” have swooped in to buy properties at rock-bottom prices and sell them for quick profits.
The most prolific players include some venerated names in the Sacramento business community, a different class of people from the horde of neophytes who tried their hand at house-flipping during the real estate boom.
This new breed of flippers started buying in earnest last year – a sign that they think prices are near their bottom.
Larry Kelley is one of those who see a big opportunity. Kelley, 66, supervised construction of the 3,500-acre Stanford Ranch subdivision in Rocklin, and now runs the McClellan Business Park.
Thomas P. Winn, 55, whose Winncrest Homes was once the region’s largest home builder, also has jumped in.
“You’re sad for people that have gone through this,” Kelley said of the people losing their houses to foreclosure. “But the market is trying to correct itself.”
Flipping is not as popular – or as damaging to the local market – as it was during the housing boom. Then, investors simultaneously rode and helped create a wave of unsustainable home prices. In hindsight, they bought at an absurdly high price and sold for an even more outrageous sum.
Today’s flippers follow a more tested, but still risky, strategy: Buy low, sell high.
You can see them – or their representatives – in a huddle every weekday morning near the Sacramento County Courthouse’s main entrance, where foreclosure auctions are held. Most wear earbuds attached to cell phones. Several cover their mouths with pieces of paper to hide their words as they speak with their partners on the other end of the line.
Equity is king at these auctions: The opening bid is usually based on how much the homeowner owed on the mortgage, plus any fees or penalties. The more the homeowner paid off, the greater the opportunity for a bargain. This isn’t always true, because sometimes lenders discount the openning balances to well below what the borrower owed.
The goal is to find a home worth at least 20 percent more than its final auction price.
Most homes don’t meet that benchmark, and the auctioneer wastes words as investors wait nearby. Leave that one to the banks, their silence implies.
But if the price is right, investors pounce. They snag a fifth of foreclosures in the region, according to figures from real estate tracking firm DataQuick Information Systems.
Eighty percent of these homes will be flipped within a year. Typically, they will fetch about $30,000 – or 20 percent – more than the flipper paid.
Flippers often pay cash and buy starter or midlevel homes. They’re criticized for crowding out other buyers, and their newly improved homes come with a question mark: They look great, but are the fixes superficial?
Mostly, though, flippers are helping Sacramento recover, said DataQuick analyst Andrew LePage. Banks are the alternatives to home flippers, and banks usually won’t spend much time or money improving homes. In some Sacramento-area neighborhoods, lender-owned properties have turned into vacant eyesores.
A flipper, on the other hand, wants a quick buck, and is motivated to make the house look good – fast. After the home is flipped, an owner or tenant usually moves in quickly.
“There’s a real estate ecosystem and these investors play an important role in it,” LePage said. “In nature, you need scavengers.”
It’s not that easy to flip. …
Ultimately, to see the values that flippers bring, just ask local residents to consider what happens if they were to disappear…
“It’s better than letting them sit vacant. I wouldn’t be doing this if we couldn’t make money,” Kelley added, but, in contrast to some banks, “we’re not letting neighborhoods go to wreck and ruin.”
Kudos for getting the word out. Give us a call and lets help you make profits at the auctions, minimize your risk and re-build your communities. It’s a win-win-win for all. 800-310-7730 x2 for the details. Hurry, is next week!
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