Auction service Sharp Equity
believes that trustee sale auctions of foreclosed properties should no longer be attended only by wealthy investors who have cash or hard-money financing on hand to close the deal.
Trustee auction sales are noted for providing investors with the opportunity to buy foreclosed properties at a price that is at least 70% under current market value, Sharp Equity said this week. The only hurdle is buyers are required to pay the entire bill one business day after submitting their bids.
Arizona-based Sharp Equity said it is changing this model by rolling out a new Trustee auction sale platform with mortgage lender, The Legacy Group.
As part of the deal, The Legacy Group will provide trustee sale auction bidders with bridge loans for homes they acquire through Sharp.
Since Arizona laws stipulates that all homes bought at a trustee sale must be paid in full one business day after a bid is placed, most normal investors lack the funding to qualify.
The bridge loans offered to buyers through Sharp's relationship with The Legacy Group are eventually refinanced into lower-interest-rate mortgages.
Ted Overton, a loan originator at The Legacy Group, said, "We start by pre-qualifying borrowers for a permanent mortgage; once approved they can bid on property at trustee sale through Sharp Equity…the simplicity of this is very compelling. If a property has adequate value, borrowers can achieve 100% takeout financing."
Write to Kerri Panchuk