Archive | December, 2005

First-time bidder

30 Dec

Note: This entry was from my first abortive attempt at a blog, hence the intro­duc­tory paragraph.

Hey, wel­come to the blog—all four of you who’ll prob­a­bly read this. My best friend and col­league, Sean Neu­mann, has been bug­ging me to blog for the bet­ter part of a year (since he set it up for me) so I sup­pose it’s time I wrote something.

I actu­ally have some­thing worth post­ing about, too: I am offi­cially “in the game,” where “the game” = invest­ing in real estate fore­clo­sures. Today I went to the bank and got $25,000 in a cashiers’ check and went to the King County admin­stra­tion build­ing where the Seattle-area fore­clo­sures are auc­tioned. To pre­pare, yes­ter­day I drove around with Christo­pher Hall of the Fore­clo­sure Group (they’re a com­pany asso­ci­ated with Win­der­mere who help peo­ple buy fore­clo­sures) and looked at prop­er­ties going on the block Fri­day. After­ward, I attended the meet­ing in Kirk­land where the prop­er­ties are dis­cussed. My wife Crys­tal and I crunched some num­bers that evening and we decided to bid on one out in Auburn that had good prospects.

On the way down there this morn­ing I was super ner­vous and wanted to back out; I felt kind of sick and shaky. “The worst thing they can do,” said real estate guru Glenn Purdy said at a con­ven­tion in Vegas I attended last March, “is say ‘yes’.” Well that’s true… part of me wanted to lose so I would be off the hook, despite know­ing the num­bers worked out and it was a good deal.

When I arrived (in the Seat­tle rain, of course), I showed the Fore­clo­sure Group rep­re­sen­ta­tive my cash, and he gave me another check for $100,000. The FG offers a hard-money loan to mem­bers, a ser­vice they pro­vide so you can bid on prop­er­ties up to four times more expen­sive than you have cash for). I showed the trustee guy my cash and license and bam—I was an offi­cial bid­der. It was excit­ing… for about 30 sec­onds. He read off the open­ing bid, $84,010, fol­lowed imme­di­ately by a bid by the trustee itself for $140,000. This was a way for the trustee to get the min­i­mum amount they wanted out of the prop­erty. It had the unin­tended side-effect of lock­ing me out before I’d nod­ded, coughed, raised my hand, or what­ever else counts as a bid. (Our “strike price,” or the most we were will­ing to bid, was “only” $100,000.)

Instead of par­tic­i­pat­ing, I watched the back-and-forth between about five bid­ders for five min­utes, going up by $100 or $200 each time. Bor­ing, really; the only funny bit was when one bid­der said “163” loudly from one side. The trustee looked at him and said “the bid’s at 163,5.” The first bid­der hadn’t heard the pre­vi­ous view bids, but the crowd tit­tered. (Hey, at least they weren’t laugh­ing at me.) The property—a 3-bed, 1-bath in 1200 sq.ft.—sold for $172,900. Cash.

It’s good to have the first one under my belt… it won’t feel so intim­i­dat­ing next time. The FG rep­re­sen­ta­tives, Kerry and Armen, were both quite nice and sup­port­ive to me. For that I’m grate­ful because this is a lot of cash to be toss­ing around!