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Phoenix Trustee Auctions – make sure you are ready to play with the big boys December 11, 2009

Posted by mkuhbock in Arizona Vacation Property, AZ Real Estate News.
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I did a post some time ago about auctions with a link to a great article that explained the process titled Buyer Beware,  but there is a new article out that goes into the details of how these auctions work. The only problem with the article is that the average non professional investor will read only one thing, how much one professional made in a quick one week flip.

This article can be found here and is titled House Flipping Makes a Comeback. Great article and make sure to look at the slide show but and it is a big but… these people that work the trustee sales are professionals with years of experience and teams in place. They have the cash or the access to cash to close in the required 24 hour period, they have done their research on the properties they bid and purchase via drive bys and walk arounds and even may have had access to the property to assess the repairs it will need. Another issue in the property/ investment flip game is that everyone is now getting into it and the competition for great deals is much greater than it use to be 2 or 3 years ago.

On a  $75,000 to $150,000 flip you will need at least $20,000 net profit on the purchase to turn around a $10,000 net profit on the sale. That is if you have a good Realtor and the all of the market factors of the home are aligned. Properties can drop in value by 25% overnight, (if comparable sale properties in a couple of block radius drop their prices due to being banked owned or going into foreclosure this will affect your ability to sell at your planned price) I have experienced it first hand thus you need to be well healed and have all the necessary resources at hand.

Properties of great value might produce greater margins but will also have greater costs associated in the transactions and are tougher to resell, more first time buyers than those looking for a $250,000 family home. Then when you get into the luxury market you can steal properties but good luck trying to sell it unless you have it on the market substantially below current market prices like the example in the last article.

On a positive investor note it is anticipated that there will be a new wave of properties entering the Phoenix market in the spring, not good if you purchased a home and will be trying to slog it off in the next couple of months but good if you are waiting to enter the market in the early spring.

In any case if you decide to venture down the path of playing the trustee auctions then best of luck in swimming with the sharks. 🙂

Have a great weekend wherever you are!

Michael

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