Buying at Auction?

2012 Oct 6, 11:19am   3,486 views  9 comments

by Barney_Franks   ➕follow (0)   💰tip ()  

Patrick, firstly congrats on the book. I just purchased it on the kindle and wish you the best of luck w/ it.

Just wondering if anyone has bought a property at auction? If so, what are the pitfalls and is there any lessons learned anyone could share with me?

I am looking at a fairly new house that will go to auction in a couple of weeks. I have a limit of course which is on the low side but just thought I would ask around.

Comments 1 - 9 of 9   

1   Eman   2012 Oct 11, 5:36pm  

Pitfalls? Where do I start & where do I end? How about you win the bid. You show up & the house is on fire? How about you show up & the whole house is gutted to the sheetrock? How about you find concrete in all the toilets? How about you didn't know that the 1st lien is subordinated to the 2nd lien, and you buy the 1st? Ready to kiss that cashier's check good bye?

Which county is the property in? How much does it worth? What's your max bid? Is it currently on the market as a short sale? How many loans does the property has?

If it's not in Santa Clara County, I cannot help you.

2   Barney_Franks   2012 Oct 12, 1:39am  

Thanks for the response. I have fully inspected the house, I am a contractor and happy w/ the condition. It is fairly new and in Nevada county, CA. Currently it is owned by Chase, an REO property.

3   Eman   2012 Oct 12, 1:56am  

If it is an REO, you should get clear title. Is this one of those auctions held by auction.com or marshallandhudson.com, or some thing similar where the winning bidder has to pay a 5% buyer premium?

4   Eman   2012 Oct 12, 2:31am  

What do you have to lose? Just bid and have fun with it. If you win at the price you want, great. If not, who cares.

5   Barney_Franks   2012 Oct 12, 2:32am  

Thanks Eman, Yes, I am not expecting a huge discount actually. There is a reserve that is undisclosed.

I will bid what I believe is fair market value, nothing more. Even the realtor who showed me the home said that the last time she witnessed an auction she believed there was fake bidders involved as "there was no way that many people had been interested in that house" quite an admission.

The only thing you can lose is a 5K deposit that is a hold on a credit card, that is you lose it if you don't close within a certain time frame.

6   HEY YOU   2012 Oct 12, 2:33am  

I just looked at a Sheriff sale property but wouldn't be interested because of condition. OK, I've been too lazy to do the research. Does anyone have any info on this type of sale? I'm in Oregon.

7   PockyClipsNow   2012 Oct 12, 2:39am  

i would never buy at auction other than trustee. its a total racket AND you compete with buyers who have financing.

if you really love that house and want to pay retain then its fine of course.

but if you want a discount and that is #1 goal focus on short sales first day of listing, contact agent direct (no buyers agent, ever)

8   Eman   2012 Oct 12, 9:08am  

ptiemann says

When faced with other bidders, in one room, a buyer will pay more than the buyer would if he would write a rational thought out offer from home...............

So much for Patrick's suggestion that "all offers should be publicly disclosed". It might actually drive prices up.

This is what kills me. I've been to several of them. They end up paying retail plus 5% commission. It's like WTF were you thinking? You could have gotten it for 5% less. You have the time to do inspections and negotiate for a lower price. Instead of losing 5% commission if you back out and pay top dollar.

9   B.A.C.A.H.   2012 Oct 13, 2:08am  

ptiemann says

When faced with other bidders, in one room, a buyer will pay more than the buyer would if he would write a rational thought out offer from home.

You said the key word, "faced". Because guys, for so many including some who post here, real estate is about "face", even more so now that the Bay Area has been flooded with newcomers from certain face-centric cultures.
I Lose My Face almost daily in the office(*) among my coworkers who reside in The Fortress (I don't reside in It), even though my kid got accepted to the same elite UC's that their Fortress Kids strive for. But I Lost My Face Even More when my kid chose to go to a CSU instead of the elite UC's, because the high demand major is not offered at the UC's.

(*) I Lose My Face out in the parking lot, before even entering the office, parking my beater looking (but well maintained) old car out front, among their Late Model Prestige Vehicles (you know the kinds). I might have a very low fixed cost for operating that vehicle, but I Lost My Face. To my coworkers, that is. Living outside The Fortress, my neighbors don't care about My Face.

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