I’m in California. The owners of this rental i’m in haven’t paid the mortgage for 6 months. Notice of default was filed on 7/19/07. They were given 90 days to get current or sell. Or the house goes on the auction block Oct 18th. Why are they entitled to any more rent? If legally I have to continue paying rent. The law needs to be changed.
What is going to happen after the sale? When can I expect to be kicked out?

Every heard of Online Real Estate auctions?? If no, don’t be flabbergasted. The traditional way of selling properties has been either through placing an ad in the classifieds of the local daily or through real estate brokers or through real estate auctions. No doubt all of them have their advantages. With a classified, you can reach an audience spread over a wide area. But this might result in a lot of unwanted calls and enquiries. Real Estate Auctions provides you with great results, but the reach is kind of limited. This is where online real estate auction comes in. They provide a great platform for you to sell your property. It minimizes the hassles of prospects visiting the house frequently at untimely hours as well as attracts only qualified buyers who are actually looking to buy a property.

There are numerous advantages of holding an Online real estate auction.

1.Reach: One of the biggest advantages in an online auction. Through Online real estate auctions you attract buyers from across the world. So you are assured that your property is sold at the best price that you can get.

2.You decide the date and time of auction. The prospects can look at the details of the real estate like photographs etc. and can participate in the auction.

3.You will get a better pricing with auctions. It is a known fact that auctions usually drive up prices. Online real estate auctions are no different. They get a better price for the property owner with minimal effort. Sooner or later the property owner will be out looking for a new house, maybe in a better neighborhood.

4.You get the right prospects in an online real estate auction. Invariably, the prospects will be people who are interested in buying the property and with the required credit line or funds.

Irrespective of the state of the property market, online real estate auctions provides a great way to sell your properties for a better price. It is really a quicker way of disposing properties without the usual hassles. In real estate auctions it is said, the buyers as well as seller, benefits, a lot. The Seller has the advantage of getting the properties disposed off faster and the Buyer has the advantage of getting the property into his hands quicker.

As said earlier, the very nature of online selling ensures that you have a wide qualified audience, which the traditional methods rarely offer. Also you can be assured of the people who are bidding for your properties as the site/portal where the auction is to be held would have already, if you have a property and are looking to sell of the property, but were scared about the hassles involved in it, Online Real estate auctions are the way out for you. You decide the time, place and date of the auction. You are more or less assured of a better price. You can be assured of a quicker disposal of your property.

Part 1: Flipping Is Not For Amateurs

Price deterioration costs, finding a buyer who can obtain financing and ultra-conservative (scared) appraisers are the biggest obstacles a real estate speculator faces right now.

Selling (exit) strategies are just as critical as how cheap a flipper buys the inventory in a declining or soft market.  As I stated before, in an appreciating market almost anyone can make a profit.  You can pay too much and have the cushion of selling whenever you want (because appreciation erases your holding costs and other “boo boos” that happen along the way).

Seasoned Flippers Make Mistakes Too

I find it a little humorous when someone, who supposedly is a “seasoned” flipper, tells me they have never lost money speculating in real estate.  Trust me, in this market (if you are flipping with volume) there will be at least an occasional loss.

Ask an experienced stock trader if they have ever lost on a trade!  Why is buying and selling real estate any different?  Hopefully in this article I’ve given you good information to conservatively “trade” real estate and some ways to minimize your losses.

Now I’d like to provide you some lessons I learned a while back from a seasoned pro.

Great Advice From A PhD In Math

About 15 years ago, when I was deeply entrenched in my agricultural consulting business, a very street-smart commodity trader (speculator) gave me some great advice.   This Cal Tech math PhD graduate not only was educated in numbers but also had made and lost his fortune 3 times trading commodities (truly the key to wisdom because he’s still trading).

John (his first name) traded all the commodity markets but had his favorite ones he would trade more than others.  He preferred buying options to limit his downside.  Basically when you buy, say a sugar option contract, your risk is limited to the amount you paid for the option contract (s).

Knowing he was very good at what he does and a consulting client of mine (gentleman farmer who lived in Maine and liked to own almond farms), I asked him if he would mind passing along some good potential option trades.

Because I had bought some houses using options, I felt comfortable with the pre- determined risk (ie only the money I bet on the option contract).  As with real estate options, commodity options can be bought with different maturity dates… and are priced accordingly.

Part 2: Lessons Learned From Option Trades

John decided he would pass along some of his option trades that offered the least risk to me.  The first one he told me about was buying coffee options.  The option contracts were “cheap” because the coffee price was low.

John watches for weather occurrences that can affect prices (either positively or negatively).  In this case, he knew the price of coffee was historically as low as it has ever been and the option contracts were being offered at a relatively low price with a fairly long maturity date.

He knew if a storm hit in the main coffee growing region that coffee prices would increase.  Sure enough, the storms hit the coffee fields with vengeance.  Both hail and flooding occurred and many fields couldn’t be harvested.

What Does A Coffee Option Contract Have To Do With Real Estate?

Being my 1st “trade”, I bought just one coffee option contract for $1,600.  When John told me to sell the contract, someone else paid about $26,000 to speculate on prices going even higher.  The holding period of my coffee contract was approximately 6 weeks.  When I got my check from the commodity broker, guess what I asked John?

You got it… Do you know of any more good trades?

By the way, John bought 100 coffee option contracts… but let’s get back on track.

Nothing Is a “Slam Dunk”

John told me speculating in commodities doesn’t always work out this way, even when it appears to be a “slam dunk”.  Furthermore, he said that many times he loses on his trades even though all his research and conservative stop losses/options strategies protect from a giant loss.

I told John that I understood but anxiously asked him if he could inform me about the next conservative option trade (with a big potential upside).

John gave me three more recommendations that I bet on.  One of them (cattle) made a small gain, one (sugar) I lost my option money and the final one (natural gas), I sold my option contract 3 days before it expired (not John’s recommendation) and well I didn’t lose ¬all my option money but in the 3 days left prior to the expiration of the option, I could have made $55,000 if I stayed in until the end as John advised.

John didn’t want me to lose any money and decided not to give me any more trade recommendations.

Part 3: And On To Real Estate

I learned so much from this commodity venture with John.  The lessons taught me well transitioning from a real estate investor of 26 years to the completely different world of real estate speculation (flipping properties).

Let’s see if I can shed some light for you so you too can learn from my experiences.

1. 1.    When you buy to resell (flip) you won’t make money on every deal if you are doing it on a regular basis; some you will make a little profit and some you will make more than you could ever dream of going into the deal.
   2.    Even if you are an experienced flipper you will still lose money on some deals. Hopefully you have learned to minimize your loses so you can comfortably move on to the next deal.
   3.    When you flip property you are betting that your costs will be less that the net price you receive at closing.  A lot can go wrong when you speculate.  When John told me coffee was at its lowest price in decades and a storm could cause substantial damage to the coffee crop, did John know if the storm would even hit the coffee growing regions?  No, John just knew his downside was very low because the coffee price was at an all time low… and if the storm hit, there was a great chance his option contracts would be worth more when he sold them.
   4.    Options have much less risk than paying cash for a property.

A big part of speculating is buying a property that has great upside potential and buying at a price that gives you the best chance of making more than your total costs.

If a property is in a tougher area, you’ve got to buy cheaper than when a property is in a nice neighborhood.  Additionally in an appreciating market you can pay more for the same house on a percentage of current value than you can in a declining market.

Time on market reduces your net price in two critical ways during a buyer’s market (holding costs and price deterioration costs).  If you choose the MLS and a sign as your only marketing tool, be aware your only solution to reduce selling time is to lower your price.  Also if you don’t sell your flip and convert it to a rental property (investment), you made an unsuccessful “trade”.

Our Live Auction Strategy

Our on-site live auction strategy reduces risk by producing a buyer every time in 1 month (or less) after the rehab is completed and doesn’t cap the up side price, unlike a listed property that has a price tag attached.  Our floor is protected by 2 “stop losses”: 1. That the free market system will move the price to what it’s really worth.

This 1st stop loss is supported by the fact that buyers who will occupy the property as their residence and long term investors won’t allow the property to sell too cheap.  Our track record supports this, as our overall sales price is 101% of average comp value (117% in 2009).

And the 2nd stop loss… if the seller’s reserve is not met, the property doesn’t have to be sold.

Conclusion

So to review the 3 reasons for flipping failure… here they are:

1.    Paying too much when you buy and not factoring in monthly price deterioration from the falling market when you sell.
2.    The inability of selling and closing fast enough
3.    Pricing your flip too low or too high.
4.    Unrealistic expectations and being too greedy.

I hope this 3-part article has been informative and has given you a different prospective on flipping houses.  Please feel free to contact me if you would like further assistance.  Our website is SellWithAuction.com.

Randy Grigg
President Elite Auctions
(661) 325-6500

• No Commissions paid by the seller
• A definite sale date, set by you
• A sale at true market value with no upside price limitation
• No looky loos that can disrupt your life
• A marketing program that produces qualified bidders who will close quickly
• Sell in “as-is” condition with no contingencies
• Guaranteed multiple offers, even in a slow market
• Reduced carrying costs

“How To Sell Your Property In Just 30 Days, For Full Price, In Any Real Estate Market, Even This One!”

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Don’t let a slow real estate market erode your property’s equity and you’re your life difficult…Understanding the truth about net future value should help motivate you to take action to get your property sold in 30 days at full market price.

In a slow buyer’s market builders and motivated sellers attempt to spur interest and liquidate their properties more quickly by offering incentives to the anemic buyer pool in hopes of reducing holding expenses and price erosion costs.  Early in the cycle these attempts can shorten the days on market…but as the declining market becomes more pronounced, competition from other sellers offering expensive incentives, doesn’t have the same positive effect on selling the inventory.