Foreclosure of the Week: 555 Carlton Avenue

Make no mistake about it…auctions can be very dangerous.

Note that I am only talking about properties of interest here (like the PH signature property above), not some smaller, less attractive place way off in a less desired neighborhood.

First, auctions with more notable properties are just teeming with sharks (in the form of developers or professional real estate speculators) that have done all their research on the property and have already run models on various outcomes.

Those folks know exactly how much they can tolerate, and will bid fiercely until they hit their P/L thresholds.

You have to remember that this is their daily bread and butter business, and they prepare exceptionally well.

Their price threshholds may well exceed the listed default price, and be well above what an amateur would like to buy the place for, and so amateurs run the risk of getting emotional and bidding well above comfortable levels due to very savvy, very interested professional types present.

In the end, you can’t bid higher than you have liquid in hand, but folks have been known to bring more than they think they need than bid properties well over market as a result, due to strong activity by professionals bidding (who are also expecting to further elevate value on a multiple basis by putting at least some basic reno (or better) in.

As a result, amateurs may find that the bidding waters become very deep and dangerous, very fast.

So be careful.

Anyhow, enough of the caveats.

Yes, get there early.

Payment-wise, you must have IN HAND bank checks for a 10% down-payment of what you bid. The gov’t only wants to have one auction process per property, and not have to come back because someone’s check bounced.

To prepare for the 10% down payment, and not knowing what the final price will be yet, people often have one big bank check for what they are sure they will have to pay, and then have several bank checks (or certified checks) in smaller $1k or $5k or $10k (or whatever floats your boat) increments up to the highest amount they are willing to pay.

As soon as a bid is declared the winner, the winning bidder immediately (right then and there) meets with the auction referee to sign and settle up, and YOU MUST BE ABLE TO CLOSE THE REMAINING 90% IN THE NEXT 30 DAYS.

(sorry, caps lock stuck, heh)

Oh, did I warn you yet? 🙂 Back to the caveat side, because people are only putting 10% down and know they have 30 days to come up with the rest, amateurs run the risk of actually bidding too high (again, based on bidding pressure from the sharks) and over leveraging themselves wit a bid that is too high (for market, and where the bank will appraise to back up their loan within that 30 days…).

So again, be careful, do heavy research regarding taking the place as-is (with respect to valuation, premium you can *really* afford above that, and amount the bank is likely to underwrite as lynchpin to your loan strategy).

Everyone else there will have done same, have liquid funds in hand, and will likely be ready to do whatever they can to land this for their business.

Okay, that’s all I can think of.

I’m sure there are several articles around with similar caveats and recommendations.

Good luck.

I would love advice on going to the auction — how early does one have to arrive, what kind of funds does one need to bring and in what form, and what are other tips anyone has to offer?

This house has been in and out of foreclouser for the past 6 months. The owner somehow stops the process last minute. Its not gonna go.

Although I don’t know the circumstances of the owner/s who foreclosed, as someone who lives nearby I feel for them. Over the last 7-8 years there have been sporadic attempts to complete the renovation of this house. Shame it didn’t work out.

Architecturally, this house has an important role to play in the immediate streetscape. It is one of three 4-storey buildings at the corner of Dean and Carlton. Of the other two, one is a 19th century limestone and the other a new construction townhouse approaching completion. While it may seem insignificant in the overall scheme/scale of AY, this old house does much to humanize and give character to the corner. I hope whoever buys it will undertake a sympathetic reno.