Recently I watched an REO expire and relist on http://www.auction.com (still with representation of the listing agent). The home was reasonably priced while on the market but the pricing did not accomodate for the condition of the property which would have led to a considerable discount.
The property is now listed with a starting bid price of under $20,000 but the fine print hints towards a reserve price. Upon further investigation and a live online chat with a representative from Auction.com I discovered that indeed there is a reserve price that is undisclosed. Not a problem so long as there is still someone in the market place willing to pay the reserve PLUS the 5% buyers premium to cover Auction.com’s costs of the sale and profit.
The Real Estate auction idea is great, in fact, this is one of the better setups I’ve seen. Buyers can have buyer’s agent representation – essential for navigating potential pit falls and arranging for needed inspections. Additionally, unlike Trustees auctions and Tax Foreclosure Auctions, Buyers can finance their purchases on certain homes (some homes are designated as “cash” due to condition).
I read through the processes, each home has three open houses where potential buyers can inspect the property prior to bidding (I’d suggest having an agent represent you and arrange for a home inspector to accompany during the open house, this will help identify any hidden issues AND help you determine a maximum bid). Have your agent register you for the auction and then begin arranging for funds. Most auctions have a minimum deposit (like earnest money).
Now it may seem like common sense, but it’s extremely important to pre-plan before bidding. Set your maximum price and stick to it, Auctions are designed to drive up the price, but if played correctly you can get a great buy on a great property. Your agent can help you determine a fair market value for a property, need an agent – contact me.