Article #4 from Foreclosure Articles
by David Whisnant Editor, Real Estate Investor, and Attorney

Foreclosures:

Why I Do Not Buy Foreclosures On The Courthouse Steps

owed about $40k on each. I was shooting for a target price of $80,000 or less which would make this an easy six-figure profit day. I researched my comps the day before the auction, and there were 10+ foreclosure units for sale currently listed with realtors at around the $140,000 mark, so I thought that was a pretty decent indication of value.

I watched the other foreclosure properties go, waiting for the condos. All went very close to market value. I had found in the past that the sales price at auction was typically too close to market value to leave room for profit. But, these foreclosures were so lucrative that I wanted to be there to see if I could get them.

Finally, the condos came up. As I teach in my course on foreclosures, I never bid until the very end. You don’t want to excite people, especially at foreclosure auctions. There are too many people standing around with the cash to up their bid if the foreclosure auction becomes competitive.

The foreclosure bidding started around $50,000, which was the mortgage balance plus legal fees on the first unit. The bidding went up to $80,000 very quickly. It then went to $90,000 and above $100,000. What happened next blew me away. A guy beside me, who told me earlier that he was a doctor looking for foreclosure deals, started bidding. He and another guy pushed the total to around $160,000, a full $20,000 more than you could have bought ten or twelve units for through a Realtor. The first condo sold above market value!

The next foreclosure unit was much the same, with the condo selling right at full market price of $140,000+. This meant that not a dime of profit was to be had by the buyer.

The final condo unit being foreclosed was finally up for auction. The unit had


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