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.