A VA Repo - I Won the Bid But Lost the House

I had started earlier in real estate about ten years when I decided I needed a house. To get them, I had to bring my salary quite a bit, although I had a fairly good job as a programmer analyst at a large company. I go through their jobs. I switched jobs three times in about two and a half years, every time, always a big increase in salary. If I had not a job that demands I would have had to do a difficult time, dass

Afterthe job switching maneuver I ended up buying my first property, my home under the GI Bill with A VA loan and no money down. Yes I did happen to make the first offer on a house my sister, a real estate saleslady, had just gotten a listing for. Some might consider it just luck. I didn't, since I had planned and executed a strategy to get a house once I got my salary at a point high enough to qualify for a loan. Had I not bought that house it surely would have been another.

The second house I bought was an investment and not to live in. It was a near new home, only about a year old. Someone I knew well had asked me if I wanted to buy their house. It just happened to be about three weeks after I had gone to one of those weekend real estate seminars. I had borrowed several hundred dollars off my credit card to attend - against my wife's wishes. My goal at that seminar was to come out with one good idea that I could eventually apply. I got several.

So when I got that unexpected call to see if I wanted to buy their house I immediately said yes, not having the foggiest idea how I would accomplish it. I did, however and with no money down by allowing one of the original tenants to stay in the house for two months rent free with me taking over the loan and house ownership. I used a credit card loan to cover the two months house payments.

That too could have been considered luck, but it took some thinking and talking to pull it off without using any of my money. That was a direct consequence of remembering some of the finer points from that real estate seminar "that I shouldn't have gone to" according to my wife, because it was too costly.

I could have just been lucky on both those house purchases, but I tend to feel that in spite of those opportunities that seemed to just come to me that my resulting actions I certainly would not have bought those houses. I hadn't really thought much about "no money down" as a way to buy a house, those transactions just happened to be that way.

During that time of buying my second house I was also looking for another house to buy. I thought it would be nice to eventually own a few houses myself. Since I could get two houses with little or "no money down" why couldn't I get a third one? That first one really didn't count as far as I was concerned since it was to live in.

Are HUD or VA Repos ok?

I did some research and found VA/HUD repos in my area were going for more than they were worth. In other words, people were bidding too much for them, thinking they were getting a bargain. I didn't want that to happen to me. At certain times and in some areas, HUD/VA repos are very good deals, but not always.

I found a VA Repo to bid on

I decided that I would consider those government repos since it was possible to get a good if one knew the property values. I had a pretty good idea of what houses should cost. I checked HUD and VA listings from lists I got from Real estate brokers looking for homes in my general area. I found a nice size home near Ontario California, with a nice size yard, a big pool, in a nice neighborhood.

It was just a few years old. Everything was in good condition except the pool was empty and filled with trash. It also needed cleaning, aside from the trash. I had some questions, but the VA was not open and bidding was closing so I hurriedly put in a sealed bid of $103,000 which was reasonable in my view.

I was lucky and won the bid!

I was shocked that I won the bid. How lucky I was. What was my next move? I checked with the VA for their financing details.

A Disaster! I needed financing

My heart sank! They were not offering financing for that auction. Normally they do on repos. That was one of the questions I was confused about that I couldn't get answered. The terms had mentioned getting your own financing, but it seemed they applied to investors buying several houses at a time or those buying apartment complexes. What a disappointment! I now had to find financing which I knew would be difficult and require a big down payment. I never would have bid had I known that.

Three days to find financing

I had three days to get financing for the home. All lenders I called told me I needed about 20 - 25% down payment, to get a loan. I didn't have that. After many fruitless calls I could not get financing because I didn't have a sufficient down payment.

No financing for me

I sheepishly called the VA, explained my situation and asked if they could they disqualify me because of my misunderstanding their financing and could not get a loan. I didn't expect much since it was a government agency but was pleasantly surprised. They removed my bid and there was no penalty. I was very relieved.

VA/HUD auction rules: understand them

I new there would be other chances to buy a house. I did learn a lesson there. One needs to thoroughly understand auction rules before they make a bid. In my particular case, it was on the last evening of the bid and too late to contact the VA for answers to my questions. My normal caution went out the window because I was so anxious to bid. It turned out I won the bid alright, but lost the house.

Copyright © Charles Harmon

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