How does auction.com really work?

28 Replies

I've heard mix stuff about auction.com. Just curious if anyone have done deals there and what's the outcome and how it work. 

it works.. you put up 2500.00 deposit to bid.. if you are the successful bidder EM is usually 3 to 10k per property.. then its a normal escrow.

although sales are as is.. so make sure before you put up your EM and bid deposit that your sure you want to buy it.

I would say 95%of the deals are pretty much retail.. and about 5% are decent deals .. so you really have to watch it and scour the site to make a decent score.

@Jay Hinrichs Thank you for the information.  For some reason auction.com for Anchorage, alaska looks very good, prices are very low thats why I posted this question.  Once you win the bid, there no way to back out of it is there? 

sure you can back out you just lose your 2500 bidders fee and if the EM is non refundable in the contract you lose that as well.

Auction . com is not a site you can play the wholesale assignment game very well at.

you MUST close in the name of the entity you made the bid in.. you must have proof of funds in that companies name etc etc.. I suppose some wiggle around it.. but its not easy and I don't think you see many in the wholesale assignment game working this site.

I probably won't use auction .com for wholesaling. I do want to flip and hold later on once I establish a track record of finding deals. I guess the main thing I want to do right now to start my investment career is to learn about all the ways people are getting good deals either using auction.com, wholesaling or even spotting a good deal on MLS. I'm a believer that if I find a great deal, the funding (either a buyer for wholesaling or investment partners for flipping) will come up. I appreciate the information

@Jay Hinrichs and the warnings.  

I personally don't subscribe to the myth that find a deal and the money finds you.. I would go find the money first then the deals will follow.

The reason I said that is because I already have some partners and a hard money lender line up that is willing to do some projects with me (on flips) once I can show them a great deal.  I'm sorry to not mention that.  I will def not start looking at houses without any kind of fund already in the works, unless I just strictly want to do wholesaling and even then I would have network first. 

Hey Youdo, 

I look on there too (among other auction sites). For the REO's you see, you can find out what the bank bought it back for on realquest express (or other sources). This is likely near their reserve price to help you figure out if you can actually get them to agree to your bid (what you can afford). Keep me in the loop on how things go as I haven't bid on anything yet and would like to learn from your experience.

I've bought a couple SFHs through Auction.com.  Rules must vary county to county as where I live the EM is the greater of $750 or 5% of bid.  There is a 10 day outbid period after accepted bid.  The initial bid is on the courthouse steps and outbids are placed with the county clerk.  If no one else is interested, you can find bargains, if owner occupants and/or hedge fund guys are biding, it's close to retail. If been at a couple bids where the hedge funders initial bid was 1% off retail.  I guess they make money on scale and process efficiency. 

@Connor Dunham thanks for the advice. I will let you know if anything happen.  The only I'm worried about is that my partners will bail out after i win a bid.  Some of them are out of state so it takes them a while to get back to me and the property might be gone by then, or I win and lose the EM and bidder fee because I can't come up with all the money in time.  

@Terrell Garren I guess i need to make sure to not for in love with any house because that will cloud my judgement.  Def need to stay with the numbers.  Thanks for the advice

I've bought three from Auction.com.

The first was a decent deal.  It needed a lot of work and after debating, I decided to rent it aside from flip it.  There were some unexpected issues with the home I didn't count on (new furnace, all new windows, etc.) but it worked out.  I can still sell at a profit and after rehab it cash flows very nicely.  I paid $22,500 for it and I could sell it in the high $80's after I put about another $45k into it.

The second was a hell house.  Lots of mold in the basement that I didn't know about.  Copper pipe had been stripped in the basement as well as electrical.  I paid $4,000 for the house and put another $50k into it.  I could sell it for about $65....so not as good of a deal, but it is rented at cash flowing nicely.  I could have done the same just buying retail.

Third was a surprise.  I submitted a pre-auction bid for $7,001.  It was accepted.  The house needed paint, interior doors, some minor clean up and it was rented.  I put another $7,000 into it, rented it out, a few months later put a $4,500 roof into it and I can sell it for about $45k.

There are good deals if you plan on doing the work yourself...I'm not seeing many exceptional deals though.  You have to value your time - if you have the time to fix them up, then the deal is solid...if you don't have time to swing a hammer, slop some paint on, or replace a toilet, then you're better off going retail.

One frustrating thing is there are many folks these days that are buying some of these run down homes  then attempting to rent them out or seller finance them on the condition that you make the repairs.  It's similar to wholesaling only they are taking possession...and then letting them sit instead.  Sounds like a scam to me - you make the repairs and the owner still holds title on a "lease to own" agreement....no thanks LOL.

@Ed E. sound like some decent deal there in Denver, wish i can buy a house for 7k. I might have to move. But yeah I have the time to fix these up myself along with my family member, I just hope If I do get one It doesn't have too much surprises, i hate surprises in general.  When was the last time you bought from auction.com, how long ago? 

Originally posted by @Youdo Thirakul :

@Ed E. sound like some decent deal there in Denver, wish i can buy a house for 7k. I might have to move. But yeah I have the time to fix these up myself along with my family member, I just hope If I do get one It doesn't have too much surprises, i hate surprises in general.  When was the last time you bought from auction.com, how long ago? 

 LOL - these weren't in Denver.  Two are in Indiana and one is in Fort Morgan, Colorado

My last transaction with them was about 14 months ago.

@Ed E. that make more sense, thought denver was a hot market.  Did you do all these from out of state? or Were you living there at that time?  

Originally posted by @Youdo Thirakul :

@Ed E. that make more sense, thought denver was a hot market.  Did you do all these from out of state? or Were you living there at that time?  

 The two in Indiana were out of state.  I live in Denver so the one in Fort Morgan is about an hour and a half away.  All three were purchased based on photos and inspection reports listed on auction.com

You need to be careful buying out of State and you need to be mindful of local laws.  Most of Ohio as an example has "point of sale" provisions so once you buy the home at auction, you might have 30-90 days to pass the local inspection.  If you don't have funds to do that, you could get into a bit of trouble.

Originally posted by @Ed E. :
Originally posted by @Youdo Thirakul:

@Ed E. that make more sense, thought denver was a hot market.  Did you do all these from out of state? or Were you living there at that time?  

 The two in Indiana were out of state.  I live in Denver so the one in Fort Morgan is about an hour and a half away.  All three were purchased based on photos and inspection reports listed on auction.com

You need to be careful buying out of State and you need to be mindful of local laws.  Most of Ohio as an example has "point of sale" provisions so once you buy the home at auction, you might have 30-90 days to pass the local inspection.  If you don't have funds to do that, you could get into a bit of trouble.

 I probably won't do out of state investing until i have more experiences or know someone that lives there that i trust.  So how are you finding your deals now ? any certain project? 

I foreclosed on two properties in Arizona about a month ago.  I am waiting for the County Treasurer to issue the deeds in my name...it's been a slow process (I started the process last January) but that's where my efforts are currently focused.

@Terrell Garren   Auction.com come does two kinds of auctions.

they are now cryers for sherrifs sales as well as they have their on line OREO auction activites.

your describing sherrifs sales.. I am describing when you bid on their auction site.. Like what @Ed E. did.. those properties were already run through the system..

Me personally I won't buy unless one of my trusted team has inspected.

@Connor Dunham on auction.com there is bank owned and Foreclosure Sale. Is bank owned consider REO? Will you get a clear title if you win bank owned auction? On auction.com I was chatting on live chat with customer service representative and I asked if I will get a clear title on bank owned properties. I've been told that on bank owned properties doesn't mean you'll get a clear title. You still have to do a title search. Is anyone of you have any experience with bank owned properties? If so have you ever ran in to a surprise lien?   

Are you guys buying these properties cash, or mortgaging?  
I've looked around on the site, but have been hesitant for the same reason as Youdo - don't want to get involved with a bid that I can't close and then lose my bidders' fee.  

Originally posted by @Ed E. :

I foreclosed on two properties in Arizona about a month ago.  I am waiting for the County Treasurer to issue the deeds in my name...it's been a slow process (I started the process last January) but that's where my efforts are currently focused.

 Wow a whole year now, hope it get done soon

Originally posted by @Brian Stike :

Are you guys buying these properties cash, or mortgaging?  
I've looked around on the site, but have been hesitant for the same reason as Youdo - don't want to get involved with a bid that I can't close and then lose my bidders' fee.  

 I think its all cash, at least thats what i would expect just because they need to get rid of it n clear their books but i can be wrong?? anyone? 

@Connor Dunham what are some of the other sites you use to see what the foreclosed amount is? I've toyed with Realquest Express and have considered a paying membership, but haven't jumped into foreclosures yet as I'm still fairly new. (one rental currently, used to own a tri-plex years ago and sold it, and currently in the process of picking up another SFR rental). Looking to scale up this year and pick up (hopefully) minimum one property every 6 months or more....

@Viktor Bokun REO is bank owned. You'll usually get a quit-claim deed with most REOs. With retail transactions, you'll usually get a warranty deed. The price you pay is directly related to the risk associated. Terminology and protections vary from state-to-state.

@Brian Stike  Sites with Public Notices will say what the foreclosure amount is. These are different for every jurisdiction.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.