Hi. I just received a listing 40 lots MHP on public utilities in great area. However, they will not allow to do Phase I inspection and they have reserve price.
Just curious about the following:
I don’t know how you buy without appraisal or environmental contingency? Thoughts?
Hi Andriy:
I’m not an attorney and I don’t know what state you are in or the laws. So this is not legal advice, just my opinion.
Can they set the reserve price higher than the market value? YES, they can set it anyway they want.
How hard is to finance the property from Auction? Most auction terms specify cash sale and a non refundable deposit that is required before you can bid. So there is a lot of risk here. Be sure to carefully read the auction terms to find out if financing is even possible.
How can you do or request on site DD? Again, read the terms. If DD is not addressed in the terms/rules you might be able to negotiate something. Most auctions allow a viewing date before the sale, but that is just for a basic walk through inspection.
If it’s a property you are really interested in you might try making a regular offer ahead of the auction and see if you can get it under contract with a normal purchase agreement that would give you DD period and other protections. Many auction companies will also sell the property on normal terms before or after the sale. In the end, they just want a commission and a sale is a sale.
That’s my two cents!
@jaydub thank you for the response.
They require 10% down at the auction and 60 days to pay the rest. 60 days is enough time to finance it. However, they do not allow Phase I contingency.
So you are saying there is an option to buy it even before the auction? I believe the property is in the estate so it might require the auction.
My apologies, I didn’t see this sooner and reply. Don’t know where you are on this, but if it’s in an estate, you might be able to contact the executor or administrator of the estate. There is often a legal ad in the local paper regarding the deceased’s debts/creditors that would have some contact info, or you could just call around to various parties you know are associated with the deceased to find out who is the executor. You could just say that you want to make an offer on the property before the auction and see how they respond. I doubt that the auction is actually required. It’s just an expeditious way to liquidate the asset.
If it is a REO (bank owned foreclosure) they may be required to auction it. But be careful because if you win and don’t follow through you will lose your deposit.
I have bid on a property at auction, and the auction house (Ten-X Commercial) required proof of funds and set a limit on maximum bid (equal to your proof of funds). You will not be permitted to do extensive DD, it is a “take it or leave it” “as-is” situation. In my case, I knew the property well, it is in the same location as another of our parks. I was outbid, the eventual winner was a 1st time MHP operator, I believe, and they overpaid and it shows (there’s not enough money to run the property properly).