CRR Blog

Deals are What Happens while You are busy making other Plans...

A client called and asked about a beautiful home on a huge lot in Indian Wells, CA. This amazing custom country club property has a guest house, a pool, and a tennis court.  It is valued at over $2Million.  It went to sale on 3/18/2016 for $1.2Million.  Look up Camino Del Rey in Riverside County in the street window of our single property search.   

No one bid on this property, so it became an REO.  A 2nd loan of $975,000 was wiped out at the Trustee's Sale. Imagine if you had been watching this property.  Imagine that you had asked us about this in time to bid.

Now stop imagining and get your act together.  There is no time like now.  What's past is past.

Make up your mind to take control of your future.  The next deal could be yours!

Welcome to Sherwood!

A Custom Home on an Extra Large Lot with a Custom Swimming Pool is always quite a find.  Especially if you can get a steal on it!  This one is on Balcom Avenue in the San Fernando Valley and is walking distance from the Cal State University at Northridge.  It is in a nice area that is known as Sherwood Forest.  Seriously.  The home was purchased in 2006 by the borrower who in 2012 just decided that making house payments was not his thing.   He went in with a $50,000 down-payment in 2006 and borrowed $923,875 (broken into two loans) ten years ago.  As of March 1, 2016 he owed over $1.1 Million on the very same loans. You see that once you stop making payments, you create a debt bubble that grows each and every month.  He was able to make this work for a while...  But refusing to make your house payments is like going out to sea in a leaking boat.  It may work for a little while but eventually you are under water. 

So like Robin Hood, we have an opportunity when we see this scenario unfold.  Remember that Robin Hood was an excellent archer.  He could not just hit the bull's eye but he could split the arrow that had hit the bull's eye.  He had a sharp eye, and he practiced his art.  Rather than using a bow and arrow, we use a computer and our data.  It still takes an alert mind and a practice, but we only have to be right once to hit the bull's eye. 

In this example a buyer went to the auction and bought a house worth about $869,000 for $651,500.  He or she was not the only bidder either.  Just as Robin Hood was not alone in his desire to outwit the naughty Sheriff of Nottingham.  The lender started the auction with a "Drop Bid" of just $630,000.  That means that there was at least one other bidder.  What happened next was a contest, or as they would call it in Robin Hood's day, a Tournament.  The two skilled investors matched wits and wallets.  Eventually the winner was decided by force of will and depth of pocket.  Someone ran out of cash.  Just as in Robin's day, the one who made the greatest preparation won the day.  Your turn is coming.

We are all heroes.  We are all winners.  Welcome to Sherwood!

A Drop Bid can Make a Great Deal! So long as You Know about Specified Bids and Know to Prepare!

On the 10th of February, 2016, a Large and Beautiful Home with a Pool in much sought-after Temecula sold for $470,400.  This Riverside County home has an estimated value of $627,660 and the lender foreclosing in 1st Position was owed around $600,000 at the time of the auction.  There was a 2nd Deed of Trust that was owed over $30,000 as well.  There was therefore no obvious equity available in this property until the auction began. Take note of this important lesson. 

The lack of obvious equity did not stop an investor from being prepared and attending the auction with a price in mind.  It's a good thing too.  The foreclosing lender was owed close to market value, but created a bargain at the last minute by using the "Specified Bid" option that lenders have.  Think of it as when a store owner wants to get rid of last year's inventory and marks it down to move it.  In the same way a lender can mark down a loan balance to a "specified" asking price and open the auction at that price.

In this case the lender used that approach and a buyer was ready when the time came.  The lender marked the loan balance down to a number that would encourage an investor to buy the house and cash the lender out at the discounted price.  The lender got a cash infusion to meet their business needs, and the investor got a deal.  This is a Win for the lender and a Win for the investor.  The home is on Brookway Dr.  If you are an agent looking to list a property, maybe you should drop off a business card at the house.  If you are an agent with an interested retail buyer, you should stop by there too.  You never know when a Win/Win for others can turn out to be a Win for you as well. 

More importantly, let this be a strategy lesson.  We are always looking for equity.  Many of us get caught up in the thought that the equity has to be there already.  We step around perfectly good deals at the Trustee Sale because the equity is created at the last minute and we weren't looking for the "Specified Bid".  CRR created our bidding service to help you capture these opportunities by placing bids before the auction.  Remember, you only have to guess right once to get the deal.

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