Everyone wants a good deal on a property, especially here in Hawaii. Being a project oriented person, I would love to have something to fix and flip. Easier said than done.
Off to the foreclosure auction I go! While there, I made a friend who had some experience buying foreclosures. He had been out of the game for a little while and was just getting back in.
The auctions are held at noon on the lanai of the courthouse downtown. Great to just go and see what’s going on. Most everyone shows up at noon, so if you’re there early, do not be concerned. If you’re late, forget it.
At first glance it seems like a Mickey Mouse procedure. It’s usually breezy outside, and there isn’t any set place that the auction you are looking for will be. You just have to look for the commissioner that you met at the open house. They have to display the auction details and nothing will stick to the pillars of the lanai. There’s lots of papers and tape blowing off. One of the commissioners used duct tape and went all the way around the pillar just to hold the paper on. Some will just hold up a folder with the information on it.
The foreclosure auctions are published in the newspaper. They need to be announced at least twice to the public. Usually they are all in the same section, but every once in awhile there will be an announcement in some obscure place. It will also state if and when there will be an open house.
Anyone that wants to bid has to bring 10% of their highest bid in cash or cashier’s check to the auction, show it to the commissioner, and register to bid.
Every time my friend and I go to the auction, there seems to be a core group that’s always there. I don’t know if they’re there every day, but they’re always there when we’re there. There’s the guy with the dog-eared checks that just stands around and looks at his phone. Then there’s one that my friend calls the dragon lady, but I don’t know which one that is.
The majority of the time I’ve been there, the bank will come in with some ridiculously high price and everyone will just roll their eyes, sigh, and walk away. Then we comment to the commissioner as to why he didn’t just tell us beforehand and save us a trip.
One day, when I wasn’t there, my friend went to the auction. The first property he was interested in went to the bank at a super ridiculously high price.
Directly after, there was one that he didn’t know about. The bank’s bid was so low that he bid and actually got it. He couldn’t figure out why no one else said anything. His theory was that everyone else was still in shock from the first one and couldn’t respond at the second one. He had never seen the property.
He gave the commissioner the 10%, chose an escrow company, and waited for the confirmation hearing. Still not knowing the condition of the property, he determined his top price in case he was challenged at the hearing. At the confirmation hearing, the starting bid starts at 5% above the present bid.
Sure enough, at the confirmation hearing, which was 50 days later, there was a guy that challenged everyone. When the judge asked if anyone else wanted to bid, he raised his hand on every one of them. Then the judge sent everyone out to the hallway and the bidding started over again. Again, bidders have to bring 10% of their highest bid.
Each commissioner went one at a time. There didn’t seem to be any particular order, they just waited until one was finished before another one started. It could be that they were waiting for that one guy that wanted to bid on everything.
I don’t know if that guy bought anything. He did, however, bid my friend up $21k and stopped. It was as if he knew what my friend’s top price was. He just stood there looking at his phone and bid the price up.
After my friend won the bid, he gave the commissioner the additional deposit, and was told that he would get the paperwork in 10 days. 60 days later, the paperwork finally came and he was told that he had 35 days to close. Of course, he had to stay with their timeline even though they didn’t.
The process took so long that he had to pass up on some other good deals that came up because his money was tied up. Besides that, he kept postponing his vacation thinking that the paperwork was going to come any day. He finally booked his flights, and of course the paperwork came just in time for it to close while he was gone. Murphy’s law at its best.
After all was said and done, when he did gain access to the property, it was in pretty decent shape. It just needed a few minor repairs and a new refrigerator. The whole process took over 5 months just to get it to that point. Maybe a serious look at some good retail deals might be the way to go!
If you have any questions about buying foreclosures at auction in Hawaii, please contact me.