patrick.net

I also think this is an excellent read.

When I was house shopping from January 2009-Sept 2010,
every house I saw that didn't have a Kitchen in it, was obviously a bank scam. Jilted home owners don't gingerly remove cabinets, and abscond with the appliances and sinks, while leaving the drain trap, and water service pipes in pristine condition.

These houses were never really available to the general public, it was just an illusion. "Hey we pulled out the Kitchen and Bath, and now the FHA wont make us sell you the house, do you have cash? NEXT!".
Then you hear stories that the banks are telling the Government they can't find buyers, can they sell them in bulk to investors for pennies on the dollar? Well it would seem to me, it would be much more cost effective if the Banks were required to put kitchens and baths back in those house, and forced to sell them in the free market. Than taking a bigger loss by blitzing them out to straw company investors.

E-man says

One thing that patnet readers can learn from this is that the participants were asking questions and contributing to it in a very civilized manner to make the thread interesting and constructive.

Good observation. If one is not familiar with Reddit, posters' comments are either upvoted or downvoted by other posters/readers. Upvotes increase the chances they will appear and downvotes will guarantee the posts will disappear.

So, just to clarify, the people on Reddit are not necessarily more civilized than the posters on Patrick.net, but hateful/useless posts are downvoted into obscurity while interesting/funny/helpful posts are upvoted and "rise to the top."

Moreover, the IAMA section of Reddit is particularly civilized in that people have a self-serving interest to get answers to their questions. The original poster (who is answering the questions) will simply ignore questions they don't want to answer.

Lastly, the IAMA is probably one of the most heavily moderated pages on Reddit. Any insults or offensive remarks typically result in a ban for the aggressor.

Nonetheless, I await your additional info about the corrupt world of real estate foreclosure auctions. Thanks.

Here's a quote from http://pastebin.com/KrnzPYjH in case it goes away:

all the dirty tricks, blatantly illegal practices
Please explain.

-Before you go to auction you need to actually scout the houses. Its common for previous owners to gut the house or completely remove the kitchen. It was my job to drive to these houses and asses them, damage, repairs cost ect... Part of this was getting into the house witch were many times locked, so we would B&E all day, every day. If you could gain access a lot of times we would try and block as many windows and secure the house as much as possible. If I could block any view of the kitchen, other competitors will have to assume another 10K in cost because they cant verify an intact kitchen.
-I would keep a bunch of old padlocks with no keys, if the garage was unhooked from the opener I could get in, padlock it on the inside and then when I left i could walk out a back door locked from the inside. essentially removing the garage door as an access point. We would also put locks on side gates as well, If the other companies were using older guys to scout they wouldn't bother jumping the fences.
-Many banks will change the locks once the previous owners have been evicted but they only use 5-6 different locks. Somebody in my company somehow obtained copies of these keys witch we kept with us allowing access to many houses that would be too secure for other people to get into.
-Sometimes with the little amount of time between scouting houses and and auctions you cant get to the bank to get actual certified checks. before you can bid on any house you have to show your cash or checks to the auctioneer so you cant overbid. Certain people would develop relationships with the auctioneers were they would show fake photocopied checks, if you won the house you would just meet up with him later to pay, as well as give them a tip.
-Most high rollers would "Tip" auctioneers, my company would actually write it off on taxes as a "tip". If we won a house we would meet up later and give the auctioneer a few hundred bucks. Now nothing was ever discussed about asking the auctioneer to do anything illegal but when it came looking past not having money on the spot or saying "going once going twice sold" really fast and maybe not listening too well the tips came in handy.
Thats just a few, maybe i'll add more later.

Patrick and Malkovich,

I just grabbed all of it. Hope that is OK. Too interesting to not keep it! Hope that doesn't cause trouble! See below from reddit paste bin:

all the dirty tricks, blatantly illegal practices
Please explain.

-Before you go to auction you need to actually scout the houses. Its common for previous owners to gut the house or completely remove the kitchen. It was my job to drive to these houses and asses them, damage, repairs cost ect... Part of this was getting into the house witch were many times locked, so we would B&E all day, every day. If you could gain access a lot of times we would try and block as many windows and secure the house as much as possible. If I could block any view of the kitchen, other competitors will have to assume another 10K in cost because they cant verify an intact kitchen.
-I would keep a bunch of old padlocks with no keys, if the garage was unhooked from the opener I could get in, padlock it on the inside and then when I left i could walk out a back door locked from the inside. essentially removing the garage door as an access point. We would also put locks on side gates as well, If the other companies were using older guys to scout they wouldn't bother jumping the fences.
-Many banks will change the locks once the previous owners have been evicted but they only use 5-6 different locks. Somebody in my company somehow obtained copies of these keys witch we kept with us allowing access to many houses that would be too secure for other people to get into.
-Sometimes with the little amount of time between scouting houses and and auctions you cant get to the bank to get actual certified checks. before you can bid on any house you have to show your cash or checks to the auctioneer so you cant overbid. Certain people would develop relationships with the auctioneers were they would show fake photocopied checks, if you won the house you would just meet up with him later to pay, as well as give them a tip.
-Most high rollers would "Tip" auctioneers, my company would actually write it off on taxes as a "tip". If we won a house we would meet up later and give the auctioneer a few hundred bucks. Now nothing was ever discussed about asking the auctioneer to do anything illegal but when it came looking past not having money on the spot or saying "going once going twice sold" really fast and maybe not listening too well the tips came in handy.
Thats just a few, maybe i'll add more later.

everything you said sound...er...well, illegal.

There are a couple things i would like to add but I'm kinda sketched about the popularity of this thread.

dude you have a throwaway acct. hit us with the truth ruth. this is pretty fascinating

um, not to get into details people were underbidding properties and paying people off to not bid.....The feds are dealing with it. I'm going to try and avoid the "illegal" topic with this threads popularity. And no I/My company kept it pretty legit there's plenty of money to be made out there without breaking to law.

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Did you take any training before you began? Inspector/estate mgmt kinda stuff?

No, learned on the job. I had a smart phone, I could send pictures to different people in the company to get any second opinions.

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I ran into one of you...... I lost an offer on a house, because one of the previous viewers (one day on the foreclosed market, i got there at 10am, the previous person at 9).
The house had locks all over the place that noone had the keys to, that werent there the previous day. The realtor lockbox had had something jammed into the keyhole so it couldnt be opened, etc.
I eventually got into the place two hours later, and what was there (although damaged, no kitchen, etc) was well worth the asking price and more). Offers were open until 10am the next day, i had my offer in at 9AM, at more than 10k above asking price, and found out they had already accepted an offer before the offer deadline at 8:45.
So so so shady. I didnt realize BS like that was standard practice. Dont you feel bad doing that shit?

Well I would only go through so much trouble to secure a house, I'd be at a house 10, 15 minutes top and I wouldn't jam stuff into a realtor lock box. I'm not trying to keep the banks or realtors out, I'm trying to keep the competition out. I dont know what was going on in your situation...

Who is the competition if not banks, realtors, and other buyers like ailee43?

Other buyers who make a living doing the same thing. It is VERY competitive.

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Have you ever had an alarm go off when you entered a home and you didn't know the code?
Do they even set alarms?

many times if the house is vacant the power is off. I have never had an alarm go off but a guy I worked with did have an alarm go off and was stopped by the cops, he was let go though.

How'd he get out of that?

Told him he was checking out houses for auction, it was vacant and he didnt damage anything. I guess they had better things to deal with.

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Great AMA.
Do these companies only buy off auctions or are they also behind the "We buy houses!" ads that are plastered all over the place (in my city at least).
Most expensive house you ever saw or bought at an auction?

-I'm not really sure about that "we buy houses" sign. I would see those as well when I was driving around, nobody I knew in the business was involved with that. I always though those were some kind of scam haha... looks like insert_quarter answered this question
-Most expensive....The most expensive house I bought was probably around 650K. While I worked there there were times when I would have over a million in certified checks because a huge house was coming up and auction but nothing ever worked out. Sometimes commercial buildings would come through as well and the most expensive opening bid I saw as 3.5 million, nobody bid on it though.

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What are the margins like? Do the former homeowners ever give you a hard time? Do you get to see the inside of the house before you buy it?

Margins....We would aim for 20% after remodel cost, our expenses and to keep the investors happy. Though I have seen up to 50%+ profit on a lucky day, those are Very few and far between. Like I said we would shoot for 20% and if during that day, week or month everybody is overbidding at a certain auction site, we would just hang out patiently until the realistic prices returned.
It is very important that you view the houses before you bid, this does many times involve meeting the owners. It was very hit or miss, many "genuinely getting screwed and just cant afford the house any more" people would be very understanding. Not exactly stoked to have you knocking on their door at sunrise but they know it was auction day. Sometimes people would FLIP OUT and I would run to my car and get the hell out of there. In almost all of these cases you would check the bank record and they would be in a house we estimate worth say 300k with over a million in loans against it. It always seemed so crazy to me. These people would take HUGE loans against their house during bubble, live like KINGS for a few years, default on their loans, then give ME shit. Those were the people would would blame everybody else and give us a hard time.
-Before you go to auction you need to actually scout the houses. Its common for previous owners to gut the house or completely remove the kitchen. It was my job to drive to these houses and asses them, damage, repairs cost ect... Part of this was getting into the house witch were many times locked, so we would B&E all day, every day. If you could gain access a lot of times we would try and block as many windows and secure the house as much as possible. If I could block any view of the kitchen, other competitors will have to assume another 10K in cost because they cant verify an intact kitchen. When people were living in the house we would just assume they were for the most part intact and maybe add a little buffer to the remodel cost just to be safe. In reality though you have to be prepared for the worst, who knows what happens when you pull the carpet and their is mold everywhere.

You B&E? What the fuck?
I can only assume you're referring to vacant homes.

yes, only vacant. I'm not about to bust into your house if you are living there. hell no. I did walk into a house I thought was vacant while people were eating breakfast, total accident.

I think he is but that still seems sketch as hell.

If I learned anything from this job, I dont care where you live, If your neighbors see people poking around houses in your neighborhood they wont say anything. I can understand that if the house is vacant they wont care, but If you live there and I'm looking over your fence to check out your pool or looking in your front window to try and see the kitchen they will just keep mowing their lawn.

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Did you ever get into a violent/dangerous situation with the crazy home owners?

No, I'm not about to risk my life for a stupid house. Listen to your gut.

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What's the worst thing you've found in a house when you were scouting?

wow, thats a good question. One of the first things we check is if the power is still on. One house when I checked the meter I thought it was off. I walked around the back of the house and looked in. It was really messy and there was still a bit of furniture but that was not really very uncommon. I tried the sliding door and it was open, walked in and BAM, family is having breakfast at the table. I read the meter wrong and was in a hurry, oh well. I apologized and just walked out, they didn't say anything just stared at me. I never did find anything too crazy, what I did notice was people would leave a lot of stuff, TV's Stereos etc... I may have taken a couple dvd's left in obviously vacant houses but nothing else. I'm going to think about this one and come back to it if I have a better story.

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What's the most profit you've made from a house? The most you've lost? What happened in both situations?

I worked for an hourly wage. I just don't want to do that for a living. I never had to deal directly with profits and losses though the most I ever lost was maybe 10K because I didn't see a kitchen that was gone and had to be replaced. Though with multiple houses a day 10K can be recouped with one property. I talked to some guys from the company a few days ago and they had made over 350K on one property. They bought it at auction, sold the day they put it on the market, 350K in the bank.

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Is this still viable business strategy today?
Do you have to pay cash?
How would I go about buying my first house?

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Yes, the company I worked for is still very much in business and buys multiple houses a week. The high rollers in the auction/flip game are still doing very well. What I have noticed is the pure number of houses has gone down substantially. In my area we were having up to 200 houses a day going at auction, it allowed people to be much more risky and the houses would be much cheaper. These days in the area I worked the number have dropped to maybe 25 a day, it makes for much slimmer picking and people need to be very careful about doing theirhomework. Last thing you want to do is buy a house with a lower profit margin only to discover the kitchen is gutted and it is within smelling range of a sewage plant.
They auctioneers would only accept cash money or certified bank check.
Go to auctions and hang out, half the game is actually buying the house and competing for the high bid. the atmosphere is a lot like that show "storage wars", but you are dealing with WAY more money, though the biding techniques and rivalries are similar. For example if big players are avoiding a property that appears like a win, there is obviously something you have overlooked... IRS Lean? Inside is trashed? Something screwy with the banks or the loan? Knowing the actual status of the title is VERY important, nothing is worse than seeing somebody buy a 2nd loan on a house. Essentially he bought a loan, but not a house. Another example is a random guy who showed up, paid cash for a house that we knew had major sewage problems. If he planned to sell the house he would need to do 40K in sewage lines under a major highway, the guy basically fucked himself but walked off smiling from ear to ear. I guess what I'm saying is if you want to buy a house at auction then take some serious time doing homework and learning the ropes 95% of newcomers are gone after 1 or 2 houses because they are broke or made simple mistakes. I'd just try and find a short sale from the bank.

Wow. Thanks for the info. I have heard of mold, rats, and termite issues but never thought about sewage.

yea, in that particular situation the house had some kind of sewer problem where the leach lines were too close to the water well. The only way to sell the house was to put the leach lines on property across the street. If the buyer intended to live in it himself he would have been fine but I'm sure that was not his intentions and if he decided to move in the future the upgrades would need to be completed.

How do you find out the sewer problems?

A guy I worked with was familiar with the property through sombody he knew at the county level. I dont know the details but other people must have know because the guy bought it at 1 penny over asking price and nobody else at the auction wanted to touch it.

| Knowing the actual status of the title is VERY important, nothing is worse than seeing
| somebody buy a 2nd loan on a house.

Can you explain how this happens? I thought title insurance took care of this, and I thought a foreclosure invalidated all other claims on the property.

I'm a little rusty on this, keep in mind I would deal with a guy on the phone who took care of all the paperwork and told me which houses we would in the end go for. On more than one occasion I would be told to double check the auction number because there were second loans coming up. twice I saw people bid on these and would even get word from other auction sites of people bidding these. The regulars would talk at these auctions and when this happens from what I understood people were spending tons of money for a piece of paper. I dont exactly know the details, I only personally dealt with house evaluation/remodel cost and the bidding process, I had a paper pusher who lived on the the phone with me, he sat at a computer and sorted all the banking, title, IRS paperwork etc issues.

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How do you do research on a house to find hard to find (for newbies) problems? Any clear signs just from looking at a house, or is there a place to find a papertrail history on the house?

Well I didn't have to do most of the "paper" research, It was done buy a guy I spoke with at an office. Much of the information is available on multiple auction websites. I do know that when dealing with verifying the status of the title we would even outsource that to another guy at a different company who only verified title statuses. I would wake up before sunrise and receive a list of addresses to scout before auction. I would only deal with the houses directly. First thing to verify is if the address is correct, sometimes people would change their address and what you thought was a great looking house is actually junk. we would use IRS maps and Google maps to verify the properties we were looking at. Check for problems with the foundation cracks etc.. I would verify that the kitchen is intact, no kitchen.. add 10k to the remodel cost. Other than the kitchen the most expensive thing is the roof, a bad roof would add 20k to the remodel. everything else in a house is relatively cheap, carpet, paint, drywall, its not such a big deal. As far as paper trail history....I have never heard of one or seen one.

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Do people ever smear shit on the walls when they learn they're being foreclosed on?

yes. burn the house down, yes. Steal everything including doors and molding. yes.

Wouldn't they be held legally responsible for things like that?
I'd imagine it would not be difficult to figure out that the person previously living there took all the doors and molding.

It didnt happen a lot. We almost never bought already stripped houses and never without already knowing. It would actually be the banks problem to find the previous owners and get their stuff back, they are the owners while in foreclosure. They dont really have time to deal with that though so they just auction it as is.

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Ha if I told you all the tricks that are used in my neighborhood I see, they would blow your mind. I live in the #1 foreclosure area in the nation, and the city, north las vegas

Yea man, its insane. I would have to verify every address I was looking at because people would change the numbers on their house and people would bid on the wrong house. I've had houses that are scheduled for auction but get postponed for months, when they finally do go we sometimes like to reevaluate the property because last time we saw it was months ago. There have been times when I recheck and the house is in flames and 30 minutes later I'm watching people bid on it. I have seen houses that were completely stripped, from the smoke detectores, copper wiring, even the strikers on the door frames. People are insane.

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Where do you find these auctions? I've tried (halfheartedly) researching this a few times, and haven't been able to find a good source.

Theres abetter answer somewhere else on this page but heres the basics.
I would get an e-mail with the listing from my office. They got the listing from the internet, a quick google should set you in the right direction, there are a couple big name sites most people work from. You can also contact the county and they will have listings as well.

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Do you feel bad about making your living as part of a system that puts people out on the streets on a regular basis?
I work on Wall St, and we're certainly as much to blame as your industry (well, in fairness, probably a bit more...), so I'm not looking to judge you, I just want to know how the ethical part of it works for you.
At least to me, there's an emotional dilemma there. Although my bonus check every December doesn't say "150,000 foreclosed homes", I still know and understand that's part of what I do.

Ok this is a great question and I'm going to try and explain my feelings the best I can. I don't actually do this anymore, and one reason was because I was tired of dealing with pissed off people everyday, but thats not the only reason. I viewed the auction/flip business almost as a solution to a problem. the people who are buying and flipping are not banks and in fact we had nothing to do with you, or you buying a house, or you not making the payments for your house. By the time people like me show up the damage is done.
To help understand my feelings on the market I'll give you two hypothetical but but generally typical scenarios.
In scenario one you have the big roller high spender riding the wave home buyer. This person has a house worth 1 million dollars. This person took loans against their house, bought toys, made other investments etc. Now the bubble has crashed and their house is worth 450K. These people lived an unrealistic lifestyle and they are always the most pissed off when I came knocking on their door. We can tell how much is loaned against a house when reviewing it and it has always amazed me. Now don't get me wrong a lot of times I was blaming people for taking such huge loans against their house, but at the same time thinking WTF was the bank doing giving them such a huge loan on an overinflated house price. I generally had a hard time feeling bad for these people. These people lived like kings, they got free money, now all they have to do is walk away. In short many people we see have houses worth nothing, HUGE loans taken out against a house now worth nothing and are blaming everybody else for their problem.
Now in the other scenario you had an A typical Joe with a house that they simply cant pay for anymore. No major loans against it, average house, payments haven't been made. Or the house could be so far underwater they might as well just leave. Maybe there was a death or an unjury and the money just cant get paid. Now I do feel bad, I cant imagine what its like to loose your house but again I had nothing to do with you or your house until now, after it has been foreclosed.
A lot of times with foreclosed houses people haven't been making payments for months, even over a year. When we buy houses at auction we usually pay the previous owner a few thousand as an incentive to pack up and leave ASAP. So in that this case it is not like they are penniless. Most people know for months foreclosure is imminent. When people know they are going to loose their house the property usually gets trashed, why would you invest into something that wont be yours in 6 months. When you drive a neighborhood with many foreclosed properties its a dump, nothing is better than getting new families into nice fixed up houses and bring up the value of the area.
I don't know, it hard to explain. What I'm trying to say is once your house is at auction its the end of the road, I dont know why your house is here but its going to auction and its going to get bought by somebody. I didnt foreclose your house the bank did. Banks don't foreclose because you made your payments. If theres anything that upsets me the most about this whole housing bubble is that the banks got bailouts, the banks basically Win-Win.

Vultures are an important part of the ecosystem. I'm not sure why Blackmun seems to think that people who bought (and are buying) foreclosures have anything to do with the financial meltdown. Flippers and investors yes (in the lead up to the meltdown) but now- I don't see the case.
As a separate question- did you ever foreclose on someone who was robosigned (aka an illeagal foreclosure)?

No, but considering how unorganized the banks are It doesn't surprise me that it happens. Sometimes the banks would just start postponing everything at the auction site because they were so unorganized.

You sir are ambivalent about your old jobs value... It is a feeling I am coming to understand is inherent in just about all things in my middle age. I can understand caring less about the people who were betting on the bubble. I am also pissed off at the banks; and think that there should be a new law that requires banks to agree to further regulation if they become "too big to fail" that or keep their value under some sort of red line or split upon hitting a redline... Obviously this is a very sparse outline of what should be done.

I was reading about a strawberry picker in California who made 13K a year and recieved somthing like a 300K home loan. That is just ridiculous, of course he is going to default. Though if you are a bank betting against this loan then it sure looks like a good bet.

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What do you think of the show 'Flip Men' on Spike?

I've never seen it.

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Are auctions a reasonable way for just the basic person to purchase a house, without trying to make it a business of flipping?

I would see people come to auctions with that in mind but it almost never worked. I would imagine there is just too much risk and the time it takes is crazy. Lets say you found a house on a foreclosed house listing website and like it and the date of auction is in 1 week. Just because a house is listed for auction doesn't mean it will auction. 4/5ths of daily houses listed for auction will be postponed or the bank will make the opening bid more than market value. I have seen addresses for certain vacant bank owned homes postpone at auction for months for no reason. The idea of picking a few houses and getting one of them at auction just doesn't work, you really don't know when it will actually go for sale. When I would scout houses all the info would go into a database because we knew if I scouted 50 houses 10 will go to auction that day, 30 will eventually go in the next 2 or 3 month and 10 of those will never actually go to auction. The database allowed us to review properties months later when they actually came up.
The only way I see buying a single auctioned house is to contact people who buy foreclosed houses in bulk. Just buy the house straight from them with no flipping done and let them take a 10% profit for there work. Its still cheap and you didn't spend weeks trying to track down a house you like. The people you buy from wont mind because they can spend a little more not factoring in flipping costs yet it would still be cheaper than buying the house as is in a short sale.

"contact people who buy foreclosed houses in bulk."
Could you tell us the best place to find these companies? Is there a standard, like foreclosure.com?

I don't know, go to auctions, ask the auctioneers who the regulars are. I'm sure 5-10 people are buying most the houses in the area. In reality If I were not involved in the business I would not buy a house from auction.

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How long would it take for a crew to remodel, on average? Were you generally looking for fast, basic remodeling, or more expensive and extensive revamps?
Did you use one remodeling crew, or several? In-house or third-party?

It would take an average crew about 2 weeks to flip a house. We were looking for fast and affective, make it look new, make it smell new, make it feel new.
When flipping I would say the 5 most important things are Roof, Kitchen, Carpet, Paint, Fixtures. Now keep in mind everything was to code, if there was some kind of major foundation problem or something it would certainly get sorted but on average those were the five basic things. You are selling this house to the wife, if you walk in and there is new carpet, people are stoked, but it also smells like new paint. Those two things seem obvious but its your sense of smell and the feeling of fluffy new carpet that attracts buyers. Things such as light/sink fixtures are simple to replace and are an easy way to add value. Also those are things people touch, and when they touch it it feels new. The kitchen if it needed to be remodeled would always get stainless, it basically sells itself. Since we remodeled in bulk we had a granite counter guy who could put in granite for nothing because he was doing 20 houses a month for us. Same with carpet, you give a guy 20 jobs a month and his prices will go way down. So for the most part we would use third party but because we offered them so much work the prices are very low. Sometimes when things got slow we would do some of the remodeling ourselves but not too often.

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How much money do you think someone would need to get into the "business"?

A few hundred thousand and nothing to lose.

Except maybe a few hundred thousand.

(no answer but made me laugh)

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Why doesn't everyone do this, like on the side or something? Is it the time, risk?
Is there anything else you can do with properties, are they as viable? Maybe like renting, leasing, etc etc?
Do you have any education in the field?

-Incredible risk. There are two options, Option 1: Go every day for weeks waiting for the perfect house that you can flip by yourself with little risk. Mind you there can be 50+ houses for auction a day that had to be scouted before you would dare bid on it. Essentially is a ton of work for one house, but SOME people do it. Many times I would see people come in the the "one house at a time" mentality, I'd watch them overbid or make some foolish mistake, and NEVER see them again. Option 2: Find investors, have your own construction crews and buy and sell in bulk. Just like anything its cheaper in bulk.
-We would not waste any time renting etc.. renting IMO is a big headache. we would flip and sell. Occasionally some people in the company would use the resources of the company to buy personal houses to rent but not very often.
-I didn't have any formal education, I needed a job and this is what I found, I learned on sight. you could say I'm "auction street smart".

| Why doesn't everyone do this, like on the side or something? Is it the time, risk?
That's one of the things that led to inflated home prices in the first place.

no kidding, everybody was a "flipper" a few years ago.

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Where do you go, website, newspaper, etc, to find these house listings?

I didnt, I would receive an e-mail around 4-5 am with the listings and would just go. I'm not certain what the sites were that my company got the listing from but they were readily available on google. Though sometimes we would go to the county and look directly at their listing because once in a blue moon the websites would overlook a property. If you know of one house that nobody else knows of you are sure to get it at auction and make some good money.

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How does the company keep its employees from learning the ins and outs of the business and then leaving to do it with their own money? What's stopped you in the past from bidding on a house with your own money? Is it purely not having the spending power?

you need a lot of money and investors. I wont go into detail but the major investors in my company were filthy rich. Rather than have there money in the bank or whatever we would offer a 10% return on everything then anything left over after expenses was ours. But this money could take months to go full circle, it almost only seemed work with people who have more money then they know what to do with who can wait a while for the return.
My company encouraged us to use the company resources to purchase a home or houses but you only have so much money and branching off on your own is unrealistic. The reason I didn't take the knowledge and do it on my own was because when it really gets down to it the business sucks. You have to deal with pissed off people all day who are loosing their homes. Lawyers are always involved, people are always trying to sue you or make things difficult. I only worked there for a year for a reason, the moral is low, but the actual bidding process is incredibly addicting.

so how much did you earn in that year?

Not very much, I worked hourly and needed a job.

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I would expect that some of the homes even after flipping would be worth less six months later. Does your company really think that house prices are going back up soon or are they just really patient?

They are very careful, watch the market, be prepared for a double dip.. When you buy in bulk you don't have to try for huge gains or big risks, just set a number you are willing to spend, if you get outbid call it a day. I once went a month without buying anything, the prices were just not right and a month later people were sweating and I was getting everything.

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Every get threatened or assaulted by former owners?

tons of threats, never assulted. You just have to use the gut instinct when something seems super sketchy, get out of there.

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So I get the impression that you do the estimates since you do the pre-buy inspection of the property.
What skills or tools do you have to help you do the estimate?
If its something you acquired along the way, did you get any training?
And do you estimate the post-flip value of the property? Do you do this on the fly?
Thanks

So I was basically on the phone non-stop with a person in an office we will call him bob. Bob could do all the work I couldn't while I was driving around. Estimates were vague, I would look at 50-75 houses a day maybe 5-10 minutes per house. I would determine if the house is occupied or vacant, as well if the occupiers were renters or owners. check the roof, check the kitchen does it need paint, does it need carpet. You know the square footage from the information you had already before you showed up so carpet is easy to estimate. when I say estimates were vague I mean something like if the house needs a kitchen 10K, new roof 20K with the number of houses there is no time to go into detail. Now at the auction site if I know the houses are dwindling down and I have time to kill I can talk with Bob. Bob has a network of guys in the company who he can talk with about post flip values. When I'm driving around Bob is looking at my assessments and pictures and hes determining the post flip value. In general if you keep your top bid at a 20% profit and you are flipping enough houses you will in the long run average 20% with the gains and losses. Its basically a two man job, Bob values all my assessments then gives me a top bid number while on the phone at auctions.
Iphone or blackberry is absolutely essential in this biz

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You wouldn't happen to have a son named Ryan would you?

No, not that I know of.

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How common was it to encounter upper-deckers?

I've still never seen one in real life.

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So my house goes up for auction in 2 weeks and i am still living here. what happens then?

Heres what will happen. After the auction somebody will show up with paperwork from a lawyer as well as paperwork explaining the state laws your rights and people who you can contact to try and stay in your house. I dont know if everybody does this but we would offer the homeowner a few thousand dollars to be out in a week. Otherwise I think they had a month or so. usually there will be a phone number of somebody you can contact and they will get the ball moving.
I have heard stories of people who have moved out but from the front door it looks furnished. They tell the new owner they want 5k and they will be out in a few hours, they get their money, grab the couch and a few boxes that were left and walk out the front door.

so should i stay to get some $ or move out to avoid the law?

Based on the laws in my state we were forced to provide people with all the information to contact lawyers etc to stay in their house as long as possible. A lot of times the reason people would be paid to leave was because it can be a HUGE headache to get people out. Depending on the laws where you live I would encourage you to at least stick around and see if you can get bribed to leave. I have never heard of police showing up right after an auction and removing somebody from a house.

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Where is the best home for the money right now in Iowa City, Iowa? What is the best site to use to find foreclosures?

I have no idea, I only worked a small area of one state.

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Isn't that called flipping houses?

sure

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Proof? (If you want to remain anonymous, PM the mods. The only thing I can think of as verification is maybe a tax return?

I dont have any proof, it was a few years ago I worked the job. I know IAmA hates fakers but I guess people will have to believe me.

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If I was flipping a house what other good options do I have for buying a house is available, besides going to an auction?

Try to find a POS that sombody is trying to sell at short sale.

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Some friends of ours bought a foreclosed house. Only afterward, did the original owners come and destroy/gut the house. Does this happen often; how does your company deal with this?

We have had issues with houses that were previously gutted which is illegal, but I have never heard of anything happening afterwords. The company also has a ton of lawyers to deal with stuff like that.

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NEXT WEEK ON TLC, EXTREME FORECLOSURES, DON'T MISS IT.

I don't think anybody in the foreclosure business wants any cameras around.

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What state do you work in?

I don't want to say. To be honest having all this on the internet kind of makes me nervous.

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I'm considering doing this myself, as I have a connection to a business that charges 3% to scout and buy the house for you. Is that overpriced? Any tips before I start looking?

I've never heard of people straight up buying and charging 3%. I would be most worried about what price the house is bought at, the company has nothing to lose because they already have an arranged buyer.

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This is a terribly disturbing thread, and I'm really grateful to you for starting it. Have you ever thought about going whistleblower on your employer?

No.

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How do you feel about yourself, doing what you do?

I dont do it anymore, buying a houses at auction was a total rush, but in the end of the day it totally sucked.

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When you see scenes like [1] these, do you comprehend that they are analogous to vultures like yourself? Or do you pretend that they're just fun adventures with no deeper meaning?
"Each one of these is a life. A life that you helped destroy."

I'm a little confused because I've never seen that movie. Is that a pawn shop or something?
I guess the way I viewed it was that I'm not a bank. A lot of times the people who would be the most upset are people who didn't understand the housing market took out a lot of loans and generally lived like fucking kings for a few years before the cards came down. On the other hand there are genuine people who just couldnt make ends meat and lost their house. We have always been most respectful to people who are still in their homes when we buy at auction and in almost all cases things work out fine. From this job I learned the economy is a living thing and anyway people can make money they will. I left this job because i didn't like the work of buying peoples houses but even when I left somebody will take my spot, Its just how the economy works.
create a new version of this paste RAW Paste Data

The guy is right, about one thing. These guys weren't the original flippers that caused the mess. But they are being fostered by the cozy bank and fed practices, now after the fact. Just because there's undo blame in one aspect of their business, doesn't excuse the corruption and fraud they work under after the fact.

What's B&E?

Interesting how he mentions paint, carpeting, kitchens, and roofs ad being the main repairs that they did. No mention of any HVAC problems?

DaveM_Renter says

What's B&E?

Breaking and Entering.

Bottom feeders, making a living. Maybe they had a great HVAC contractor working for them :)

This sounds more like business as usual than a confession, this guy was a bona fied home inspector.

This is probably a pretty good representation of what's going on. Most readers here will look at this as dirty and huge amounts of money, with fraud.

These guys worked in teams, all day long every day. They had 2 weeks to take a house from being filthy to being ready to sell. Looking up taxes, liens, loans and other legal issues. They had guys going through paper work, through the county offices looking for any issues. They had guys knocking on doors, trying to see if they could see in. These guys are in a high risk venture here and money isn't liquid once it's put in this business, it's stuck there for probably 2-4 months while a house is fixed and resold. 2 weeks to fix it, a couple weeks to a few months to sell it, and then a month of paper work to close it.

It also shows that the numbers have dropped from 200 a day to 25 a day.

super interesting. thanks.

One of the commenters in the AMA thread asked about "upper-deckers". Anybody know what an "upper-decker" is?

Upper-decker

The act of defecating into the upper tank of a domestic toilet.

I didnt know what it was either, guess I'm not up to date anymore.

Interesting, but I don't know enough about the subject to separate out the mythology. I'm sure some of the stories misrepresent the facts just because the stories are so far separated from the storyteller.

perpetuallyastonished says

Anybody know what an "upper-decker" is?

Not sure you really want to know: http://www.urbandictionary.com/define.php?term=Upper+Decker

Anyway, very interesting post. Thanks for it!

Yeah people, a few titallating anecdotes and you got the whole picture.... from a semi-literate jerkoff totally immune to "rockstar syndrome" now that he finally has an audience. Yes sir, lay it on thick, the peeps love it. Yeeaaah, those greedy capitalist bastards, they're all unscrupulous, thievin', slimy conmen! Well then folks, why don't you principled, self righteous pietists, why don't you get in the game. Someone needs to clear the inventory before the housing market totally self destructs. So, get in. Bring your ethics into the arena... since all the rest are evil. This article is irrelevant, but evidently sufficient fodder for simple minded bashers.

dildobreath says

Yeah people, a few titallating anecdotes and you got the whole picture.... from a semi-literate jerkoff totally immune to "rockstar syndrome" now that he finally has an audience. Yes sir, lay it on thick, the peeps love it. Yeeaaah, those greedy capitalist bastards, they're all unscrupulous, thievin', slimy conmen! Well then folks, why don't you principled, self righteous pietists, why don't you get in the game. Someone needs to clear the inventory before the housing market totally self destructs. So, get in. Bring your ethics into the arena... since all the rest are evil. This article is irrelevant, but evidently sufficient fodder for simple minded bashers.

Guys, guys, guys... looks like we hurt someone's feelings. We have to tone down the rhetoric in here. There are some rich people trying to make some (more) money. After all, they have bills to pay too! They're just scraping by. No need to come down so hard on them.

Welcome to the real world people, this happens everyday. Thought you guys knew this stuff?

dildobreath says

why don't you get in the game.

Why would someone play games with so much money? Most of us don't have enough to play.

So, free tid bit on real estate. (this thread helps demonstrate the proof)

"You make your money on the buy, not the sell."

LarryPatrickMaloney says

Welcome to the real world people, this happens everyday. Thought you guys knew this stuff?

So, free tid bit on real estate. (this thread helps demonstrate the proof)

"You make your money on the buy, not the sell."

Completely agree. Just like these poor chaps: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/07/01/BUPQ1K504I.DTL These local boys were just trying to make a buck - nothing wrong with that.

If they hired thugs to break the kneecaps of anyone else trying to move in on their game I totally wouldn't blame them. Whatever it takes. Everyone's gotta put food onna table, right?

APOCALYPSEFUCK is Tony Manero says

You scum-sucking retards! Get with the program! People don't live in fucking houses. Only ASSHOLES live in houses! You invest, flip, broker and use them to launder money from other enterprises to offshore accounts where the tax man can't get at your money.

I disagree with some of this.

blueskytwo says

Hello, everyone, this is me in this site made the first post, I hope to make friends with everyone.

What on earth are you talking about? Are you trying to say that you are the guy who posted to reddit? That seems unlikely, but OK.

blueskytwo says

Hello, everyone, this is me in this site made the first post, I hope to make friends with everyone.

No I'm not sending any good faith money to your Nigerian bank.

blueskytwo says

Hello, everyone, this is me in this site made the first post, I hope to make friends with everyone.

Ahso, we have happy happy fun time.

blueskytwo says

Hello, everyone, this is me in this site made the first post, I hope to make friends with everyone.

Depends. Bear or Bull?

dodgerfanjohn says

blueskytwo says

Hello, everyone, this is me in this site made the first post, I hope to make friends with everyone.

No I'm not sending any good faith money to your Nigerian bank.

User blueskytwo was definitely a spammer. Thanks for alerting me.

That was a test comment to see how good our forum immune system is. I get many a day like that, almost always from foreign countries (Japan this time), but usually they don't bother to actually confirm their test-spam comment by clicking on the link in the confirmation email. So I just blow them away each morning, and they creep back in at night.

Ouch. Thanks for telling me.

OK, fixed now, I hope. Let me know if not by including "@Patrick" in a comment. I will see that comment for sure. I might not see it if you don't include the @ sign.

Great article > thread. Great find. Thanks for sharing. I gotta say nothing really surprising (or disturbing) but confirming suspicions, like watching a reality T.V. show. I think the author is legit with his facts.

APOCALYPSEFUCK is Tony Manero says

Nivana is an America where a 2/1 condo in Lansing is a seven figure proposition and every paper boy owns 26 rental properties, 124 time shares, 72 SFH and flips them all in a week with all the meth dealers and arsonists who are the bold brave backbone of our Free enterprise system.

@Patrick, can you code a way for me to multiple-like posts?

APOCALYPSEFUCK is Tony Manero says

flips them all in a week with all the meth dealers and arsonists who are the bold brave backbone of our Free enterprise system.

Amazing!

Patrick,

Something is wrong with ignore function. Lately I can see the comments from people I have on ignore list.

FunTime says

@Patrick, can you code a way for me to multiple-like posts?

You mean double-like? It would complicate things, but maybe you should get some once-a-day "like bomb" to use on a post you really like...

E-man says

Who on Patnet believe they can do this without a coach? How much are you willing to pay to learn the ins and outs of this business? Mal & EBguy?……………… :)

I’m happy to answer any questions you guys may have. However, there are certain things I can’t disclose on a public forum.

E-man, thanks for the summary and additional input.

I don't think it is a question of how much I would pay to learn the ropes of buying foreclosures. The question is, even I knew the ins and outs, would I have the time to research properties and attend the auctions?

As I have a small business I certainly do not have the time for this. Particularly since many of the auctions are held during business hours. Moreover, although I may sell my business in a few years and could see myself delving more into real estate, for now, I want to buy just one multi to owner-occupy.

Now, if you (or someone you know) is already attending these auctions and willing to give me a "cost plus" deal, well, let's talk. The poster says "The only way I see buying a single auctioned house is to contact people who buy foreclosed houses in bulk. Just buy the house straight from them with no flipping done and let them take a 10% profit for there work.

If you or anyone else on here can assist in this regard, I know exactly what I want, have the cash, and am a no-BS sort of guy.

You mean double-like? It would complicate things, but maybe you should get some once-a-day "like bomb" to use on a post you really like...

I was more joking, but your suggestion is really creative!

Ouch. Thanks for telling me.

OK, fixed now, I hope. Let me know if not by including "@Patrick" in a comment. I will see that comment for sure. I might not see it if you don't include the @ sign.

@Patrick: ?? was there something here that got deleted. Why ouch?

and they creep back in at night.

That is like some image from a horror movie about rats that nibble off your toes and the end of your fingers and nose in the middle of he night when you are sleeping.

(@AF, how did I do on that one? My first attempt at a gruesome image. )

I have one more graphic if you might like it better...

LIke starving rats trapped to a can and duct taped to your asshole. They will eventually get in. (@AF - better?)

bg says

was there something here that got deleted. Why ouch?

That ouch was in reference to this:

bubblesitter says

Patrick,

Something is wrong with ignore function. Lately I can see the comments from people I have on ignore list.