Buying CRE through an Online Auction
Has anyone on here ever done this before ? The terms I have been seeing include a down payment within 24 hours of winning bid and 30 days to secure the rest of the funding, and finding your own title agency. How easy is it to find a lender within those 30 days to give you financing so you don’t lose your down payment ? Also any tips,etc.
[{"id": "fpoksy3", "text": "A ton of properties trade through auctions on Ten-X, RealInsight Marketplace, and CREXi. Here's what you need to know:\n\n1. Forget what the starting bid is. You need to underwrite to your max bid and be prepared to get to it. Those startings bids will give you hope of a cheap property, but these very much trade at on-market values.\n2. Lenders don't want to waste their time underwriting a deal for a single bidder, especially without a super strong sponsor. Be prepared to either close all cash, or with a low leverage bridge loan.\n3. When you win the auction, you are fully expected to trade. That closing period is not to conduct standard due diligence. You will have been expected to do diligence (except for title work) ahead of time.", "replies": [{"id": "fpq2c4x", "text": "u/tmilazzo So, you cannot even get deals slightly below market at Ten-X or similar auction websites?", "replies": [], "depth": 2}], "depth": 1}, {"id": "fpos5gg", "text": "/u/tmilazzo posted some great advice here. Just wanted to add a couple points:\n\n* Do NOT forget to underwrite the 5% buyer's premium on Ten-X and RealInsight. You pay it on nearly all deals they offer.\n\n* This is not some foreclosure/scrap auction. You are buying a fully marketed asset with a broker behind most opportunities.\n\n* The seller is allowed to bid. If you find yourself in a bidding war after the initial time has expired, do not get goated in to stretching because you think some other buyer is at your level. That is not always the case. A couple of states have outlawed this practice, and the sites will post a notice when the seller bids.", "replies": [{"id": "fpoufas", "text": "This last bullet is key. The seller, and sometimes the platform on behalf of the seller, will bid up to a reserve point.  I\u2019ve monitored a couple auctions recently and they didn\u2019t end up transacting. Still a big mismatch between buyers and sellers price expectations", "replies": [], "depth": 2}], "depth": 1}, {"id": "fpoulpw", "text": "30 day financing will most likely be hard money with high interest &amp; points.  You will need to have a plan to replace that funding as soon as possible if you plan on keeping it.", "replies": [], "depth": 1}, {"id": "fpsmxwb", "text": "Thanks everyone !", "replies": [], "depth": 1}]