Walking from the deposit

Walking from a deposit is tough.  It is a sunk cost.  But pride keeps us from cutting our losses and moving on.

Today I bid on a house I should not have bid on.  I did it to mess around with a process server who was bidding for a lawyer who didn’t show up.  Funny how many of my learning experiences start with me trying to teach somebody else a lesson. The auction ended and I was high bid. I paid the deposit in cash…. knowing it was probably lost money.  Luckily it was only $600.  In this county, you pay a deposit equal to 5% of the bid amount… cash or cashiers check.  The bid was a bit over $10k.  The balance is due the next day.


I had no business bidding on this particular case.  I had not done a title search on that property- in fact I did not even read the judgment.  I just knew it was a crappy lot with a crappy mobile…. and I’ll gladly pay $10k for a crappy lot and a crappy mobile.  Turns out the foreclosing plaintiff only had a lien on the lot…the mobile home was a separate loan.  So that means just a crappy lot.  And the lot isn’t worth $10k. I know better.  You just don’t bid when you are ignorant.  And I was ignorant.

Mobile Home

We spent all day scheming ways to make it work.  Short-term rental, short the mobile loan, reset the sale, check on the taxes. And lots of other low-return ideas.  But I finally realized I didn’t give a damn about the mobile or making a profit… I just didn’t want to lose the $600.  I wanted to prove we could pull out of the death spiral, even if I threw another good $10k after the bad $600.  That’s just stupid.

I know we could have made it work.  But why?  Pride.  That’s not a good enough reason for a real investor to make a buy.

So we let the Clerk of Court know I was defaulting on the bid. Luckily we just lose the deposit– some places ban you from bidding for a few months when you pull a stunt like that.

Walking from deposits is part of the foreclosure game.  You are always rolling the dice and hoping the house turns out the way you expect.  I’ve walked from deposits on houses that looked great on the outside, but had no wiring inside.  Foundation issues… asbestos… mold.  These are all things that can be fixed.  But sometimes the smarter decision is to cut your losses… and walk from the deposit.

So.  Another lesson learned.  $600 tuition.

 Cash Money