Are Home Auctions a Good Deal for Buyers.
Any type of real estate investment can be profitable. Like the stock market real estate is about timing. Auctions have become more prevalent in recent months and many buyers have asked if auctions are better deals than properties listed on MLS.
This very excellent question simplifies three bigger topics. First are you interested in just the purchase price, without concern of repair or remodeling costs? Next, have you done all the research you need to do with regards to the property, traditional sales have a contingency removal period. Finally will you be satisfied in focusing on the least desirable properties on the market.
Why would I say Auctions represent the least desirable properties on the market? A house in distress will likely be listed with a realtor on MLS as a short sale. If it does not sell because of price condition or convenience, the bank will foreclose and list it again. Should the property not sell then it would go to auction. An auctioned house will be a property that has failed to sell twice, listed with possibly two agents generally for a period of longer than 6 months, 180+ days. Unless a deal is fantastic can you afford the risk?
Can you get a good deal at an auction, yes I think you can. Are Acutions a good deal, if are looking for that needle in a haystack. Just make sure to do your homework first and don’t get caught up in the excitement of the auction.
As for the timing issue mentioned at the beginning “Don’t wait to buy real estate, buy real estate and wait”
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3 Responses to “Are Home Auctions a Good Deal for Buyers.”
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Great Post David,
I have actually gone to a few auctions and it was quite an interesting experience. Most of the homes have been on the market before as you mentioned and failed to sell. Many people that I have spoke to believe that auctions are the best thing when buying real estate but may fail to see the bigger picture of having the time to do their inspections to make sure they know exactly what they are buying. I believe that auctions are good for certain people and are not for everyone. There are what I would consider good deals at them but it depends on your needs.
Thanks again for your post, I have often wondered what others have thought.
I have also been to the auctions and was totally impressed with the activity, home sales but not the values. I was very familir with 4 of the properties sold. 4 out of 200 is not much but there were not many more in San Mateo or San Francisco counties. Two of the sales I thought sold for above market price plus they had to pay an additional 5% buyers fee to the auction company. One I thought sold at about market and one sold for less but once you tack on the 5% fee I did not see any deals worth the risk. Possibly homes in the Valley and East Bay might have sold below market. I would not know.
As David said a buyer needs to do his homework before hand. Buyers may have their Realtor assist them at the auction and with their homework. It costs the buyer nothing extra but gives them an experienced person with lots of knowledge to represent them with these Auction Sharks. An experienced Realtor can save the auction buyer lots of money and headaches.
Lee Ginsburg
http://www.leesellsmore.com
Great post David.