How does auction.com work? Can you get good deals?

Question

Anyone out there purchased any property through Auction.com?  Please tell me your story...I am interested to see if there are deals out there.  Would like to know some tips on what to look for and what to keep an eye out for?

Brian Burke · Answer

Bryan C. trust deed auctions are technically called "Trustee's Sales" and in most cases they take place on the courthouse steps. It is for that reason that slang has developed to label such sales as "courthouse auctions" or "on the steps".  It's all the same thing.  Trustee's Sales (in Trust Deed states) and Foreclosure Auctions (in mortgage states) are part of a legal process where a lender conducts an involuntary sale of a debtors property.  Title is conveyed via a Trustee's Deed and the buyer is simply assuming the same position in title as the foreclosing lender. There is no guarantee of clean title at all.

In the context of this post, another type of auction has been discussed: the online auction.  These auctions are held via a variety of websites and typically are not part of a legal process.  They are voluntary sales where a lender is either selling a property that they already acquired in an involuntary sale or are facilitating a short sale.  In some cases these online auctions are even held on behalf of non-distressed market sellers seeking an alternative to conventional selling channels.  One exception is in Florida. Some counties there actually hold their "courthouse steps" auctions online but that wasn't part of the preceding discussion in this thread.  Hope that helps!

Brian Burke · Answer

Bryan C. I've bought 50 or more houses from auction.com but most of that was two to three years ago. For the last couple of years I bid on a dozen or so houses every week and get one every six months. A lot of the houses I bid on lately are repeats. I've bid on some houses every week for months, and there are a couple that I've bid on several times for over a year. While there used to be deals, that's not the case lately.

If you do plan to bid, most of the sales are cash (some allow financing and the listing will say so) and many don't offer title insurance and are conveyed by quitclaim deed. In those cases, bidding requires the same level of due diligence (and title examination) as bidding on the courthouse steps.

Brian Burke · Answer

NA Onyido It's not that you don't GET clean title, you just don't get a GUARANTEE of clean title. That's an important difference. It's quite possible the title you receive will be just fine or easily correctable by paying whatever liens survived the trustees sale (which may or may not be a big deal).

If the title is particularly messy there could be instances where you would have to initiate a quiet title action to seek to perfect the title. I've never had to do that, however. Then again, I do my due diligence before I buy so I know exactly what my title will look like and if it's a mess, I don't buy.

Brian Burke · Answer

I've bought a few on the courthouse steps. Well...500 or so.  DD consists of a title search, bankruptcy search, "curbside" inspection, property tax inquiry, valuation, and the math of determining a maximum bid price. If quitclaim deeds make you nervous, a trustees deed won't give you any reason to sleep soundly at night.

Adam Drummond · Answer

Bryan C.

I am a realtor/investor in south Carolina, and I have kept an eye on quite a few properties on auction.com, but have never bought anything.  To even be able to bid on a property you have to create an acct, and give them your cc information so they can put a $2,500 hold on your card as a binder.  I have also noticed that most of these properties that I have kept an eye on have a reserve.  The reserve is usually not met on the properties, and therefore the auction ends just to have it reappear in a week or so.  I also know that on some of these online auction companies (hubzu included), that they can bid the price up higher on behalf of the seller.  Also, many of the properties that I have seen in my area on auction.com are occupied, and they do not allow (legally) you to disturb the "tenant" to inspect the property.  Last, from what I have noticed many of the properties (even if they are in good condition) are cash only offers.  So far, I am not really impressed with the site.  Maybe other people will comment with a success story.  I have purchased properties on Hubzu.com, and the process was terrible, but I did end up getting a great deal.  Best of luck.

Adam

Trey Waddell · Answer

Hi Brian,

Typically we always suggest that the buyer do proper due diligence on any property they are looking to bid on. This might include title research, obtaining a real estate lawyer, driving near the property (and viewing the inside if open houses or private viewings are allowed), contacting the listing agent, etc.

You actually do not need a real estate agent to bid on Auction.com - though in many instances it is allowed and there is a commission available.

In regards to bidding on behalf of the seller - at least for Auction.com - this is only done up until the reserve it met, as the seller typically won't agree to anything less. Once the reserve is met, the "counter bidding" stops. Even if the reserve is not met, there are opportunities for the seller to sell it below the reserve price to the "second place" bidder, but this is not always the case and the property will often go back up for auction again at a later date.

I understand that you are looking for other customer reviews (which is a great idea), but if you have any questions about our policies, website, etc - please don't hesitate to ask.

Good luck with your house hunting!

Disclaimer: I work for Auction.com

Brian Burke · Answer

A lot of cities in Northern California. Probably most of the cities an at least half a dozen counties.

As for inspections, most of the ones that I bought were occupied so there was no opportunity to see inside, much less conduct inspections.  My DD was limited to a title search and a drive-by in most cases.

Ndy Onyido · Answer

I do not mean to interject, but I have been following the thread and kind of got confused about some fine lines:

@Brian Burke

what is the difference between 'buying from courthouse steps' and trust deeds auctions?. A follow up question is: what title do you get on either of the instances?

Thanks

Sean Yang · Answer

I've recently came across auction.com and found this post. Wonder if anybody can share some successful stories about the site. Thank you.

Roberto Costa · Answer

Trey,

as for Auction.com, how long does it take for those properties to close?

How does auction.com work? Can you get good deals?

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