Auction.com

[Mike Anders]

Does anyone have experience using this site? There's a property I would like to bid on however everything I find about this site makes it seem like a scam. That being said, people are very inclined to post when they have a bad experience rather than a good one. Any insight would be greatly appreciated. 

[Jonathan Towell]

@Austin Maginnis

I haven't looked at auction.com in about a year. So 1) my info may be old and 2) my memory may be poor.

That said I can tell you how I understand their site works. When a home goes into pre-foreclosure, auction.com lists it on the website to show that it will be sold at the courthouse steps at a future date. Auction.com homes and all other homes in pre-foreclosure are listed at the county courthouse. At this point, investors start looking into the houses and doing their research.

On the day of the auction, the banks keep a reserve amount that is always going to be at least the amount owed to the bank. Banks are not selling houses at a loss in today's market.

Only a small portion of the houses go to auction with much equity (and thus a low note balance). It takes some bad circumstances to cause someone to lose significant equity to foreclosure, which is why it is more rare.

Of the homes that have low note balances, any investors physically at the auction will snag them up. These auctions have a room full of men and women that have already appraised every house being auctioned and know exactly what they are worth. They have cash in hand and are ready to buy at a discount. Today, the market is very hot. In Lubbock, where I am, homes are going at foreclosure auction for retail value (which is why I don't go to the auction anymore).

Because there aren't many houses with low note balances, and because of the large investor pool trying to buy those houses, practically none of them do NOT get sold at the foreclosure auction.

The only houses on auction.com that can be purchased on auction.com are homes that made it all the way through foreclosure auction without being sold. I don't think it is impossible for any deals to be had on auction.com. I just haven't seen them in my county.

There is a book called "The Pre-Foreclosure Property Investor's Kit" that you might enjoy reading. Basically, to get a property before it goes to foreclosure auction, you need to rescue it from foreclosure by buying it from the owner when it is in pre-foreclosure (or before). It is a lot of work, but it seems to be very profitable for those who can get good systems in place for it.

I hope that helps.