I’m broke. I want to be in real estate. So I do what any broke person obsessed with real estate does: I go look at houses.
Today I went to see a property that caught my eye on Zillow. Listed at $74,900. Three beds, two baths, 1,260 square feet. Built in 1915. Stone exterior. High ceilings. Original wood floors. The listing called it an “investor special with serious upside.” I called it a gut job.
The Math
- Purchase price: $74,900
- Renovation estimate: ~$70,000
- Soft costs (permits, design): ~$10,000
- Financing costs: ~$15,000
- Philadelphia transfer tax (3.278%): ~$6,500
- Agent commission (4%): ~$8,000
- Closing costs: ~$5,000
- Total all-in: ~$189,000
Best comparable sale in the neighborhood: $200,000. That’s the ceiling.
$200,000 sale price − $189,000 all-in = $11,000 profit. Before taxes. I walked away.
Then I Found Something Else
Still scrolling Zillow, I clicked on a listing with no price. Four bedrooms, two baths, 1,840 square feet. Then I saw it: Foreclosure. Live auction in progress. Connected to Auction.com. Current bid: somewhere in the $40,000s.
Forty thousand dollars. For a four-bedroom house in Philadelphia. I sat with that number for a while.
What That LA Flip Company Told Me About Auctions
When I was doing flips in LA, the company I worked with said: don’t do auctions. Their reasons:
- You can’t inspect the property before bidding — you’re buying blind
- Liens and back taxes can become your problem after closing
- Cash or pre-arranged financing required — no time to apply after winning
- You’re competing against experienced investors who know something you don’t
Now I’m not so sure their advice was entirely in my interest — versus theirs.
So Am I Going to Bid?
Not yet. I don’t have the cash reserves to close plus fund a renovation. I don’t have a financing partner lined up. And I’ve never done an auction before.
What I’m going to do instead: watch it. Study it. Figure out what it eventually sells for and what the new owner does with it. Add it to the education.
What You Should Know If You’re Thinking About Auctions
- Do the title research first. Check for liens, back taxes, title issues. Non-negotiable.
- Know your all-in number before you bid. Set a maximum and don’t go above it.
- Have your financing ready. Cash, hard money, or private lender — before you bid.
- Start by watching. Follow an auction without bidding first. The education is free.
- Philadelphia sheriff sales run separately from private platforms — prices can be even lower, risks even higher.
The Bottom Line
Today reminded me why I do this. I walked through a house that didn’t work financially and learned exactly why. I found an auction property that’s tempting and figured out exactly what I’d need to pursue it responsibly.
Not every property you look at is a buy. But every property you analyze seriously is an education. Keep walking. Keep running the numbers. Keep showing up.