Try Absolute Auction
Renee and her siblings inherited a piece of property from her father. It still has a mortgage on it, and none of the siblings are willing to pay off the property. Dave suggests an absolute auction on it.
QUESTION: Renee in Corpus Christi and her siblings inherited a piece of property from her father. It still has a mortgage on it, and none of the siblings are willing to pay off the property. The property is only worth $40,000 or $50,000, and the mortgage is for $10,000. Dave suggests an absolute auction on it.
ANSWER: Auction it. Do an absolute auction. It’ll sell for more than $10,000. Why would you go into foreclosure? Do an estate sale. We’re selling the house at absolute auction. Every dime it brings from the opening bid is the mortgage. Every dollar it brings above that goes to pay the auctioneer. And after that, it goes into the estate if you make a profit on it, and it doesn’t get foreclosed on. If it gets foreclosed on, they could come after the estate.
There may be a little bit of money here. Call an auctioneer who does real estate auctions in your area. If you don’t know one, go to daveramsey.com and click on Real Estate ELP (Endorsed Local Provider). Talk to our ELP about who a good auctioneer is in your area. Have them come out, and just tell them, “We don’t have any money to put into this. We’re not going to pay a bunch of money upfront. We’re not going to pay a bunch of money if it doesn’t sell. You get to do all of that. I’ll pay you all of that back out of the proceeds before we make a dime.” If the auctioneer thinks it’ll bring more than $10,000, they’ll advertise and you’ll get it sold.
They’re probably not going to foreclose on it anytime soon. They probably don’t want it. If I’m the investor bidding on it at the courthouse steps, I’m actually going to bid the mortgage bid plus $1. If nobody else comes and there’s only one investor at the steps bidding, then that’s how it’s going to work out.
I would try a commercial auction. Otherwise, call the bank and tell them to come get it. If the auctioneer comes up and says, “No chance. This isn’t going to work,” call the bank and tell them you’ll just deed it to them. They won’t even have to foreclose. They can just have it.
It’s a tough property in a tough end of town, which actually makes it a great investor auction property. I’m thinking the thing may bring $20,000. I might be wrong. The problem is your time of year here. Schedule the auction for the second or third week of January. You’ll be two months behind at that point. They’re not going to take it in two months in Texas.