Is a 5% buyers fee on Auction sites normal?

Question

That is a huge number to me. I am using hubzu.com to bid up to/around 250k and they clarify this is their fee specifically for "hosting" the auction, separate from earnest money or anything that goes to the actual seller (which is a bank in this case).

Russell Brazil · Answer

Yes fee is typical.

No you must offer in the manner the bank has set up, whether its auction, mls, newspaper add.

Cassi Justiz · Answer

I would see if you can find a Realtor in your market that is well versed in short sales and foreclosure homes. There are several ways you can make offers directly to the bank, but once they tap in hubzu or another auction site then as far as I know you don't have any choice but to go through those platforms. If you can get in before it goes to auction, you may have a better chance.

If you are looking for an owner occupant home, you may look into HUD foreclosures and the Fannie Mae/Freddie Mac foreclosures as well. They give preference to owner occupants. Investors can get deals on there as well, but it's more beneficial for the owner occupants. I'm not sure if it's the same across the country, but in Oklahoma you have to have a Realtor bid on it for you.

http://hudhomestore.com/

https://www.homepath.com/

https://www.homesteps.com/

Cassi Justiz · Answer

Yep. Most of the auction sites are going to have some sort of extra buyer's fee. Sometimes it is a percentage and sometimes it's a flat fee. Also look in the fine print to see if they have any additional "technology fees." The fees have all sorts of different names and they are listed at different places in the contract, so just make sure you read through the user agreements on the auction sites.
Also, another tip is that they have different ways of treating earnest money. Make sure you know what kind of stipulations they have on the earnest money and inspection clauses because the earnest money is not always refundable with the auction sites.

John Collins · Answer

Thank you for the info. I would be looking at them only for investor purposes and don't want to outbid someone willing to pay cash for an actual home. However, once the bidding sites get their hands on them with the bank setting a reserve price (this is the 2nd auction after the 1st had 5 bidders that didn't meet the reserve price), and the work still needing to be put in.. it turns into an OK deal, which are out there on a weekly basis, instead of the great one you see once every couple of months if you are lucky.

John Collins · Answer

At this point it has gone above 250k and is an extra $14k I wasn't expecting, in addition to the reserve price being higher than expected. I found this foreclosure myself before finding out  hubzu had control of the bidding... is there any way I can make direct offers to the bank next time?

Is a 5% buyers fee on Auction sites normal?

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