CRR Blog

On 9/7/2016 a bidder purchased a home in Woodland Hills on Dumetz Rd. This home has a potential resale value of  $761,000.  But for the overhead photo there may be need of some repairs on the roof.  In these cases we try and learn as much as possible.  We always suggest you go by the property and try to make an offer and look around.

The less you know, the more conservative you should be about setting your maximum buy price at auction.  Unlike the old axiom, what you don't know can and will hurt you if it's bad news.  That is not to say that you won't occasionally have welcome surprises like opening the door to see a newly remodeled kitchen.  It is more likely that we will open the door to less pleasant surprises, which is why we make sure we set our maximum bid to provide us a buffer for repair and rehab. 

Have a formula that works for you.  Some people have experienced contractors that are skilled at making  rehab cost very little, other people do the work themselves. Regardless, we have to plan our work and work our plan so that we do not overshoot our cost projection.  remember, you could have to sell for less than the value you have accepted.  So always leave that buffer.

In this example the buyer paid $575,000.  That leaves $186,000 in between the purchase price and the potential sale price.  More than enough room complete a basic rehab and do a flip.  This could also be a great rental property purchase at a 25% discount.

The Deals are at the Auctions!  ...  You have to be there,  or have our bidder be there for you...

Just last week a 3BD/2BA home on Estara Ave  near Occidental College in Los Angeles sold for well below market value.  The House is worth anywhere from $720,000 to  $800,000.  The lender was owed over $530,000.  So it would be reasonable to assume that he house would have sold for $550,000 or more.

But that is not what happened.  We always coach our clients to name a price at auction, because you never do know where the lender will set the opening bid.  You want to catch the deal, don't you?

So name your maximum bid price based on what you are willing to spend.  Throw out the other numbers.  This is YOUR DEAL!

In this case the lender took an already good deal and made it better.  They dropped the opening bid to a low $462,052.90 There was bidding because obviously this was going to be a deal no matter what and people were prepared.  But the bidding only went to $521,000 before a winner was called.  Imagine if you had saved $200k on a house near a college.  How easy will that flip or rental be?

Be where you need to be, or let someone else you trust hold your checks.  You can still make offers and go after the deals on the front end.  But cover your bases, and improve your numbers.