About what percent of sales to a 3rd party at the auction are made to investors? Of these investors, about what percent intend to flip the property?
It may vary somewhat by local markets, but in the auctions I’ve attended (5+ Nor Cal counties), I’d guesstimate that of those properties that are sold at the steps to a “3rd party,” (as defined by FR) 80% to 85% are sold to independent 3rd party “investors” (e.g. NOT a bene on the property).
NOTE: If the sale goes “back to the bank” (i.e. the foreclosing bene) at the steps (and 70% to 90% of steps sales these days DO go back to the bank) FR subsequently shows it as “B” for bank-owned. If the property is sold to any party other than the foreclosing lender, then it shows as sold to “3rd” for third-party … which could be a steps “investor” or another “bene” (e.g. lien-holder, 1st, 2nd, 3rd, etc) on the property who has a representative at the auction to bid (defend) or has exercised the bene’s right to bid through the auctioneer. It’s my understanding that only “benes” can bid through the auctioneer … everyone else must be physically present to bid.
Michelle or Sean, please correct my understanding above if I’m off-base.
As far as what % of steps buyers intend to flip? … that’s a bit more difficult to determine … depends on the local market. I’d say the majority buy with the intent to flip if possible. But there are select areas where you can pick up properties that wind up being good rentals and the numbers pencil out pretty well for buy/rent and/or restructure (leverage) for maximum cap rate. Clearly this goes to the objectives of the individual steps buyers and many at the steps are working in teams or are taking directions from institutional players.
Thank you that answering. I think the numbers the procudure you mentioned sound correct. What brought up the question was a study that I hard started and I was seeing some unusual really odd trends. It turns out I made a major error at the beginning which messed up all the numbers. Nothing like thinking outside the box trying to understand bad data, but oh well. I have been noticing more rentals, not a huge number but some appear to be parking thier money there.
I noticed you have alot of very good posts here and I look forward to seeing more.
Once again, you are right on target Danny B.