Ever purchase a property at auction?

Has anyone ever done this? We seem to have a number of auctions around here and quite a few listed at "No Reserve". Just curious if they are worth checking into? Are they on the up and up in respect to do they have staged bidders (that work for them) to drive prices up? I've heard of that before with other types of auctions so wondering if it happens at RE auctions as well.

Edited: 06/26/2010 at 08:29AM

Ned Carey

· Maryland

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Icon_minipost Jun 07 '09, 01:19 PM

I used to go to auctions a lot. I bought my first two properties via auctions.

When the market was hot auctions made no sense - the prices got bid up to high. Today that has changed and there are some good values at auctions.

I have no doubt that some auctions have shill bidders but just stick to your maximum bid and it won't matter. You may not get the property but you won't get burned either.

By the way the first property I bought, I paid $42K, it was probably worth $60K the day I bought it and it is worth about $120K today.

Edited: 06/26/2010 at 08:29AM by Ned Carey

Will Barnard

Rehabber · Santa Clarita, California

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Icon_minipost Jun 07 '09, 01:26 PM

Auctions can produce great deals for investor buyers but it all depends on your area and market. In many auctions in CA, you are competing with thousands of owner occupant buyers willing to pay top dollar so it makes it much more difficult to get the deal you need as an investor. In other areas, you can walk away with some very good deals.

As Ned pointed out, stick to your max bid and do not go over it, no matter what! Also, there ARE "shill" bidders, make no mistake! I have even seen the auctioneer go up in bid price when there was not even a bid made so again, stick to your max price and do your DD before you even get to the auction.

Edited: 06/26/2010 at 08:29AM

Will Barnard, Barnard Enterprises, Inc.
E-Mail: info@barnardenterprises.com
Website: http://www.barnardenterprises.com
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Harrison Painter

· Indianapolis, Indiana

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Icon_minipost Jun 07 '09, 01:47 PM

Auctions can also be very political. So work hard to understand the process, and if need be, get networking with the right people.

~Harrison Painter

Edited: 06/26/2010 at 08:29AM

Ned Carey

· Maryland

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Icon_minipost Jun 07 '09, 02:16 PM

Originally posted by Harrison Painter

Auctions can also be very political.

Harrison,

What do you mean? The highest bid get the property. Where does politics come in?

Thanks,

Edited: 06/26/2010 at 08:29AM

Harrison Painter

· Indianapolis, Indiana

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Icon_minipost Jun 07 '09, 02:25 PM

Auctions at the courthouse are a monster. The regulars will eat up and spit out newbies. If you bid, the price will get bid up to teach you a lesson......I have seen it in action in multiple counties/states.

Also, many of the sealed bid auctions are not quite as advertised either. I had a very good friend who is "in" with an auction company, and he has the ability to ask for "favors" and get the property at the price he wants.

~Harrison Painter

Edited: 06/26/2010 at 08:29AM by Harrison Painter

Eddie Ziv

Real Estate Investor · Studio City, California

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Icon_minipost Jun 07 '09, 02:38 PM

I never bid in an auction but from what I understand (...and I welcome correction) is that unlike with REOs or HUD properties, you may end up owing back taxes, utilities liens, etc.

Edited: 06/26/2010 at 08:29AM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Icon_minipost Jun 07 '09, 08:37 PM

I've bought quite a few homes at the monthly foreclosure auctions here in Texas. They happen once a month in every county-first tuesday of each month. They are a zoo and you absolutely MUST do thorough investigating on liens. I bought 2 in May auction.
Check some of my other posts on the subject. My best deal was $120,400 and added just a couple thousand in costs. Sold for $210,000 2 months ago. Of the 40 or so I've bought, that was my highest price one. Rich.

Edited: 06/26/2010 at 08:29AM

Ned Carey

· Maryland

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Icon_minipost Jun 08 '09, 01:28 AM

Originally posted by Harrison Painter

Auctions at the courthouse are a monster. The regulars will eat up and spit out newbies. If you bid, the price will get bid up to teach you a lesson

Thanks Harrison,

OK yes I have seen that too.

I never bid in an auction but from what I understand (...and I welcome correction) is that unlike with REOs or HUD properties, you may end up owing back taxes, utilities liens, etc.

Eddie,
You need to read the terms of the auction. This should be made clear before the auction. Usually you get free and clear title but especially with foreclosure auctions you need to know the exact terms.

Edited: 06/26/2010 at 08:29AM

Account Closed

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Icon_minipost Jun 08 '09, 10:33 PM

An auction is a heady yet bewildering experience, definitely not for the faint of heart. The number of properties up for auction has increased by over 60% in the past ten years.

Edited: 06/26/2010 at 08:30AM

Anson Young

Wholesaler · Denver, Colorado

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Icon_minipost Jun 09 '09, 02:56 AM

Originally posted by Harrison Painter

Auctions at the courthouse are a monster. The regulars will eat up and spit out newbies. If you bid, the price will get bid up to teach you a lesson......I have seen it in action in multiple counties/states.

Also, many of the sealed bid auctions are not quite as advertised either. I had a very good friend who is "in" with an auction company, and he has the ability to ask for "favors" and get the property at the price he wants.

~Harrison Painter

This is the hard part, the part I'm starting over again here. Breaking in is the hard part...

Edited: 06/26/2010 at 08:30AM

Steve Babiak

Real Estate Investor · Audubon, Pennsylvania

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Icon_minipost Jun 09 '09, 07:15 AM

I guess we need to have the OP - Kel - tell us the type of auction that is being considered.

There are estate sale auctions (title should be unencumbered, but disclosures on day of sale are the rule); there are foreclosure auctions (trustee sales or sheriff sales - buyer beware of encumbrances, title blemishes and liens); and then there are the auctions of REO inventory. I have even seen what appeared to be bankrupt owners' property get auctioned.

So knowing the type of auction will help to pin down the risks involved in bidding.

Edited: 06/26/2010 at 08:30AM

Kel S

Real Estate Investor · Toledo, Ohio

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Icon_minipost Jun 09 '09, 07:50 AM

Not really sure the story behind the auctions, but here is an example. It's an Absolute auction, no minimum. Maybe I'll attend one just to get a feel for it and see what it sells for. This auction company and several others have quite a few home auctions in my area.

http://www.pamelaroseauction.com/documents/4115%20Bowen.pdf

Edited: 06/26/2010 at 08:30AM