Real Estate Auctions: In Your Favor Or Not
The lenders unwillingness to adjust the prices on their properties is affecting us greatly. We are getting consumed by all the vacant homes.
The majority of lenders out there are not willing to negotiate on the price. I bet they just don’t want to comprehend they are on the losing side this battle.
There are not many ways out there to get these properties sold to home buyers or investors. One of the biggest ways to come to my mind is live auctions.
Online auction house’s popularity is huge today. You can have a mild auction feeling in the comfort of your own home. All it takes is a little addiction to online auctions and before you know it you will be at the live ones.
Auctions can be held almost anywhere that a microphone can be setup. The mobility of theses auctioneers makes these live auctions very popular today. They are able to setup a whole auction in front of a house in less than twenty minutes.
Everyday I drive through my neighborhood I see more and more auction signs popping up. I assuming that the lenders are trying to get a higher price than on the open market. It is true than they can receive a higher price at auction. I have seen it with my own eyes people bidding up properties more than they are worth.
Auction houses like most business have to get paid for their time. They usually work on a fixed percentage commission or a flat rate fee. The typically percentage is around 3% to 5%. Some of them even have a percentage and fee per winning bid.
Always remember when bidding that you have to calculate the auction house’s commission in the price. Just imagine purchasing a house at $200,000 and having to pay 5% commission now your actual purchase price is $210,000. It will amaze you how fast everything adds up.
The problem with a significant number of auction houses today is their rules and guidelines. Usually rules and guidelines are to protect the buyer and the seller but I wish that was true. Be very careful and read all of the small print pertaining to the auction you are interested in attending. Make sure you read the sections pertaining to bidding and buying at auction.
The first few pages of an auction always show you what an amazing deals you could get. In truth those numbers are just there to get your attention and motivate you to actually attend. Do you think that anyone would sell a house $500,000 home for $79,000?
I always thought the when you go to an auction if you bid the highest you win. I wish that was actually true. Many of the auctions have all things these super low starting points. It seems that they always forget to mention that there is a reserve price in the front of there books. Basically those numbers mean nothing and are just a fantasy. The lenders still get the price they want or they don’t have to sell.
I really irritates me that auctions are for the sellers and don’t care about the buyers. I do not like the ideas around reserve amounts but as long as they are discreetly exposed I can deal with it. That one that pisses me off is the short period after the auction takes place the seller can reject your bid. I can meet the reserve and win the auction and still I am not the guaranteed winner.
I can see that the auctions are in the favor of the seller. One of things that I hate the most is wasting my time. They make you fill out forms then make you pre-qualify to bid. If I knew my final bid really meant I won that would be different.
I believe that everyone should feel the intensity that an auction brings. I wish everyone luck and hope that you get that great deal. Keep your hand held high!
Filed under: Business