Working through a Tuesday trustee sale bid with an unseen back of the house

Your ARV is carrying a lot of weight and it deserves a poke. Two of your four comps had new kitchens, so those are the ones setting the top of your range, and 262k sits closer to the top than the bottom. Underwrite at 255k instead with the same cushion and your cap drops to 177k. That 7k is exactly the size of gap that decides an auction. Also, 52k of rehab from a sidewalk and one window. What is the per square foot on that? 52k over 1,450 is about 36 a foot, which is a cosmetic plus one bathroom number. A 1978 house with a ceiling stain becomes a 60 dollar a foot house very fast if the supply lines and the panel are original. Run it again at 255k ARV and 65k rehab and see what the cap is. If that number is under the likely winning bid, the answer to your question is already written.

Pull the actual recorded documents before Tuesday, not the trustee's notice summary. Two specific things. One, the second deed of trust. In a normal first-position foreclosure a junior lien is generally cut off by the sale, and the junior's remedy runs against the borrower and any surplus. Whether that happens cleanly depends on whether the junior was properly named and noticed under the state's procedure, and states differ on notice and on any post-sale redemption window. Confirm which position is foreclosing by reading the recorded deed of trust and its recording date, not by trusting the label on the notice. If it turns out a second is the one selling, the buyer takes subject to the first and the cap is meaningless. Two, the HOA. Some states give an association a limited priority amount ahead of the first mortgage, and the recorded lien amount is often stale because dues and fines keep running plus attorney fees. Asking the association in writing for a current statement of account is worth the step; a stated balance in the low thousands has turned into double that on deals worth reviewing closely. How the statute applies to a specific sale is a question for a real estate attorney in that state, and it's worth the hour before anyone wires anything. On the decision itself, a 26k cushion against an interior nobody has seen and a lien picture still in maybes calls for setting the cap on the bad version of both and letting someone else have it if they want it more. There will be another sale. Filings have been climbing for over a year, so the calendar is getting longer, not shorter.

52k. Sure. Add the things that always land after you own it: dumpsters and haul-off on a house that's been sat in, a water heater because it's a 1978 house, and whatever the sewer scope says. My last three flips all ate 8 to 14k of stuff that was not on the original scope, and I write scopes for a living.

I don't budget a contingency percentage anymore, I budget the specific ugly items at full price and then take the contingency on top. Your 26k cushion is your profit and your overrun fund at the same time, which means it's one fund and it's smaller than you think.

Beginner question that I'd have been too embarrassed to ask out loud: when you say cash cap, what does the county actually want and when? I've read some places take a deposit at the sale and the balance within a day or two, and others want certified funds for the whole amount on the spot. Does yours publish that, and does the deposit come back if the sale gets postponed? Quarry, you've done this before, so I'm asking you as much as anyone.

Following this because the part I hadn't understood until fathom's post is that the notice can be for a junior loan and you have to read the recorded documents to tell. I assumed the auction was always the first mortgage. Thanks for the free lesson, quarry, hope Tuesday goes your way.