AUCTION.COM - Tips for Winning?

Question

Hi BP Community,

Bidding on auction.com.  Wondering if anyone would be so generous as to share tips to win?

Danka, 
Catherine

Kelly M. · Answer

I have not yet won, but I am the high bidder now for the 2nd time on the same property.  I have learned there are actually two reserve prices.  What I have observed, the highest is seldom reached.  Auction.com will never admit to a 2nd reserve so they call it a range from the reserve price.  Anything below this range, Auction.com has the authority to reject the high offer immediately.  You'll see these properties pop right back on the bid table the next day because it was rejected without going back to the seller.  If you are below the reserve, but in the range, then they will have you sign a contract, collect earnest money, and proof of funds which they then take to the seller.  The seller has 15 days to review the offer.  On my first high offer bid,  the seller took the full 15 business days or 3 weeks before I got my rejection.  The property was right back on the auction block within a few days.  I bid again and now am again the high bidder.  I hope they don't take 3 weeks again.  I have watched properties get re-bid 3 or 4 times at least till I lose interest.  On this particular house, I knew what the maximum I would bid was, $35K.  With one minute left the highest bid was only $21K.  I bid $35K and easily won it.  The REO bank had only had it a month at this time, so I figure they would not take a low offer so soon.  I repeated the process the 2nd time and won again.  I did go up to $37K since I got rejected on $35K.  I am now waiting 1 day to see if my offer is accepted. My tips would be to visit the house first, get a first hand look at it (you'll seldom see the inside), determine its After Repaired Value market price from Zillow.com, come down at least 50% from that, make an early bid to ensure you have registered correctly, then wait till 30 seconds from end of auction, and make your top offer.  The bid increment reduces the closer you are to the end and after a few people have bid.

Joel Owens · Answer

Okay we need to make a clear distinction here.

There are similarities between auction houses but there are differences as well.

There are about 6 to 7 big auction houses nationwide that hold auctions throughout the year in different states at different times.

They all conduct the auctions differently in some respects.You also have really small local auction companies that do stuff locally but do not have the size and scale of the big guys.

With the reserve not being met the owner can still accept your offer or counter your offer or decide to do nothing at all.

Many properties go to auction already listed for sale and then the bank takes an offer already out there or re-lists it again when they do not get their price.

Auction companies always proclaim how they get these great prices but what they do not say is how many of those offers make it to closing.Not that many.

Wayne Brooks · Answer

Usually, to win-you have to pay too much!  Reserves are quite high (not that irrelevant starting bid).
Be careful, clear title is not guaranteed.  Their language says "any lien not wiped out by the foreclosure, stays with property"  ie. property taxes, code violations, etc.

Wayne Brooks · Answer

@J Scott,
I thought it used to be that way. But I looked at an auction about a week ago, here in Fl, and it specifically said something like "any liens not wiped out by the foreclosure auction would remain".  This was a "first look" auction. Some properties hadn't even been to the foreclosure auction yet.  They had a disclaimer that if bank didn't get it back at foreclosure auction, the Aucyion.com auction would be canceled.  I found it interesting because that means they were bypassing the traditional REO Listing, and going straight to Auction.com auction.
By the way, Thank You for all the great info/forms you've posted at 123flip.com.  You're definitely doing it right.

Account Closed · Answer

I guess you're talking about auction.com trustee sale. Based on my experience, it only takes one idiot to bid against you, on a property that you want, to drive the price to the moon. The veterans will stay out once the price hit their limit.  It's a number's game for them. At the steps, all you have to do is to outbid the veterans by $100. That's not the case at auction.com. You have newbies that love to overpay for a property although you still get a discount most of the time.  If done correctly, you can get the same price most of the time through short sales with essentially no risk.

Good luck.

Kelly M. · Answer

Here's an update to my post on Auction.com.  I was the high bidder twice and got rejected twice.  It did not show up this time for a third time, but it was then listed on MLS a couple weeks later.  The funny thing was it was listed for $52K.  I had bid $39K, so I wasn't that far away.  I was not able to get in to see it, but after it was listed on MLS, I got my agent to get us in.  I'm glad now that my bid was rejected since it needed more work than I had imagined.  I may still try to buy it, but I will not unless I can get if for less than $39K.  I have since been following another property.  It has now been auctioned 4 times and each high bid was very close to $88K.  After you are the high bid, they want you to sign the contract, send them certified check for $5K and then they reject you.  Lots of hassle unless you know you are going to get it.  I figured I would let someone else go through that hassle.  I may get serious on that one now.

Catherine D. · Answer

Thanks Minh L.!

We ended up being the winning bidder at a great price! :)

However, we did not meet the reserve @ 20K under the reduced list price.... Will see.

Kelly M. · Answer

More on the house I was trying to buy on Auction.com.  It was listed on MLS, but only for a month.  It went off listing and is now back on Auction.com.  It has now been bid on 3 times.  I have not bid.  The Auction.com has called me all 3 times to encourage me to bid again.  I have pretty much concluded that it is a colossal waste of time to try to buy on Auction.com.  It is just too much of a pain in the rear to have to pay $5000 earnest money with hopes the bank will accept your high bid.  They almost never do.  I noticed today that another house that I have watched get rebid and rebid disappeared for a couple months, but is now back on.  It has now been auctioned at least 3 times again.  You can't get a good deal on Auction.com.

George Gray · Answer

Joel Owens is absolutely correct!  Read the terms and conditions of each property you are considering.  Don't assume that all auction companies operate identically.  I am an auctioneer and some of the clients I have worked for over the years do very different things.  Some clear the title and offer a warranty deed, and others only offer an AS-IS sale with a quit claim deed.  USDA is notorious in our area for the latter.  There can be deals at auction, but property inspections and due diligence are a must to play the game.

J Scott · Answer

Generally, the contract/addendum will state that clear title will be provided, and if it cannot be, the buyer has a right to terminate.

So, for all intents and purposes, clear title is guaranteed.

AUCTION.COM - Tips for Winning?

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