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Auction.com
please tell me your experience on buying from auction.com.
i understand there's a starting price, then a reserve price,
which makes no sence-why not start the price at the reserve?
has anyone profited from a home bought on this site?
the reserve seems to be very high.
thanks!
Hello Marc. Use the "search function" at this site, and you will find plenty of responses to your question.
Raymond
Hi @MarcStein,
I have successfully purchase, as well as lost out some properties on auction.com.
The reason for the low start price is to drive interest towards the property, so more people bid on it, and drive the price up. keeping in mind these are all cash deals, you need to be careful not to get too caught up in the bidding.
I was bidding on a property in Cooperstown, NY and for 3 days I was the only bidder at $18,500. The last hour of the auction, some knucklehead bid all the way up to $40k, and I let him have it. Ten days later, last Friday, I got a call from Auction.com advising that he reneged on the deal, and if I was interested in it at my last price of $38,500. It did reach the reserve at $38,000, mind you, but I only offered to buy it at my $18,500 price. It will be back on the auction block shortly...
My other property I was the only bidder, and won it in Newburgh, NY. And, it did not reach the reserve. I am closing on it shortly.
Do not forget the 5% premium that is added to the price, you really need to remember this fee, as it is added to your bid at the end- there are some crazy bidders out there.
Lastly, even though you might not hit the reserve, if you are the high bidder, auction.com will go through the motion of having you "buy" the property, and put down an earnest money deposit (EMD). The seller has 10-15 days to either accept your low bid or reject it.
thanks, very helpful info.
also, how do you know if title is gareenteed free of liens,
or not?
Kenneth Wong I was looking at a house on that site recently. It said the house was occupied and don't bother the people there. Is there any way to look at these properties before bidding it?
I just won one. It's pending bank approval on my winning bid below reserve. They are a pain to deal with. They need tons of information and give you very little time to get it in. I will think twice before I buy again. Will have to be a great deal.
Try the search feature there is a very long thread going about this site
@Kenneth Wong Great Great Story Big ken!! Do you have a follow up after that? Perhaps some pictures of the project? Did you have to put down 5% and the 2,500? That's crazy if you do!! Keep us posted or keep me posted rather. I really want to know. Thanks KW!!
@Bobby Beard Can you provide a follow up Bobby? I curious on what happened? Fill me in...what happened next after you sent over your docs? I'm really interested. Thanks Bobby!!
My first (and only) experience with Auction.com was straight-forward and hassle-free. The house pictured below had a starting bid of $5000, and I ended up purchasing it for $14,150 (plus a $2500 buyer's premium). Unlike an eBay auction that's over as soon as the initial time expires, Auction.com adds additional time to the clock when bids are placed in the closing seconds of the auction until there is no more bidding activity - no bid sniping. Auction.com states that they have the right to also bid on behalf of the seller, so I don't know if I was bidding against another investor or just an Auction.com employee - they magically dropped out as soon as the reserve was met.
Within 15 minutes of the close of the auction, I was contacted by a representative who told me exactly what to expect from there -- execute the contract, submit earnest money, wait for buyer approval, etc. Closing was a snap and took place within 30 days. I received a special warranty deed, but many of the properties are sold without any sort of title guarantee. It would be wise to conduct a thorough title/lien investigation through your local court clerk's office or title company prior to bidding.
With new paint, carpet, and minor repairs, this house could have been rented immediately or sold for a decent gain. I'm putting around $25K into it (windows, siding, kitchen, bathroom) and should walk away with a healthy profit. I've read about both good and bad experiences with auction.com - I'll happily bid again!
Interesting....thanks and good luck---nice house!!
Hi:
My name is Doug and am a semi experienced real estate investor. We are currently looking and investing in the Tucson region. We have had several interactions with auction.com and have nearly always found that the sale prices here to exceed any opportunity for investment. We were at an AZRIA meeting last night and the topic came up. Our guest speaker, who invest all over the country, said this is not uncommon. Banks have narrowed into this outlet for Bank REO's and foreclosed property as an opportunity for them to score the bigger buck rather than follow tried and true, and not as profitable, prior practices. If you have ever gone to a live auction.com auction you will nearly always find a person bidding upward that never wins the bid, but assist in making sure the house gets top dollar. it was a suspicion at first, but confirmed last night. No concrete evidence to support this claim and I am sure this belief would be contested, but the recommendation last night was to steer clear of auction.com
Any reaction to hubzu.com which has auctions too.
I noticed on Auction.com for example it may say "property is reported to be occupied and is buyers responsibility to take possession".
So, I am to assume it is the buyer's responsibility to potentially go through an eviction after winning the bid?
Thanks.
Auction.com used to be a great platform to buy REOs. You would bid to your max and they would send the offer to the seller. If the seller was motivated enough you could score a deal. Today its just a waist of time. They have reserves that are typically either retail or over retail. There is no discount to account for the 5% auction fee or for an occupied home. Your max will never be enough and they will never present to the seller since they will always simply shell bid on behalf of the seller up to the reserve retail price. Then it goes right back to another auction cycle. So if you really want something, you will have to follow it through 5-10 auction cycles for a very small likelihood of winning. It looks like auction.com lost its main sellers to Hubzu and Homesearch. They are either looking for retail buyers or have something very wrong with their valuations.
Thanks Serge. This is what I am noticing as well.
They have shell bidding they bid on behalf of the lender from their own admission. It's sad really to play those games. Market value is determined by what willing buyers are wanting to pay.
They are also selling many of these properties with tenants still there which can cost a lot of time and money to get out.
I really do not like residential but was thinking of just buying some for cash if the low offer is accepted and then reselling for a 10k to 20k profit. I am thinking HUD might be better than these auctions or I might buy at the courthouse steps. At any place you have to look at a lot of properties to find ones at a great price.
I would only buy cash really cheap to the point where I resold I could do it quickly to a cash buyer for a profit.
I purchased two homes through the site. After the first disaster I said I'd never do it again. For some reason I went back and bought again and again wished I wouldn't have..
Shell bidding, horrible to work with, high fees and have to user their title company..
Both properties I got were money pits.
There is a reason properties end up there...
So I'll say it again... I will never buy through them again!
To echo other postings; purchased a multi-family property via Auction.com. It passed the reserve and was won by someone else. They backed out (the 'story' I was told was that he (bidder) never told his wife he was bidding and when it came to signing the purchase agreement, she nearly killed him) and I got the call. The process went smoothly from there.
The one difference with me was that I was very familiar with the property as it had been on the market previously and I had toured, seen the financials, rent roll, etc. Gave me a lot of confidence regarding the value of the property vs. what I was willing to offer.
Oren
Originally posted by @Joel Owens:
Thanks Serge. This is what I am noticing as well.
They have shell bidding they bid on behalf of the lender from their own admission. It's sad really to play those games. Market value is determined by what willing buyers are wanting to pay.
They are also selling many of these properties with tenants still there which can cost a lot of time and money to get out.
I really do not like residential but was thinking of just buying some for cash if the low offer is accepted and then reselling for a 10k to 20k profit. I am thinking HUD might be better than these auctions or I might buy at the courthouse steps. At any place you have to look at a lot of properties to find ones at a great price.
I would only buy cash really cheap to the point where I resold I could do it quickly to a cash buyer for a profit.
I would not waist my time with auction.com for your strategy. For what its worth, I am a member of the "Gold VIP" program. This gives me early visibility to some inventory and a personal rep to help negotiate deals. I think if you've purchased over 20 homes with them then they will qualify you. Its a nice service when there is inventory that can be purchased. I had a long conversation with my rep and they seem very well aware of the issues. They claim its the seller pricing out into an appreciating market. The best deals were typically ones sold by Fannie Mae that were homepath homes that were on the market over 90 days. They would typically present any high bid and Fannie would accept if it was close to 70% of last homepath price. They used to have a good number of these every month. I have not seen Fannie inventory for 3-4 months. Nationstar moved everything to Homesearch. Ocwen went to Hubzu. So the trick is to search for who the seller is. US Bank is a pretty reasonable seller, BofA and Chase not so much. Hubzu is is even worse. They will stumble through a transaction using reps in India and they do not maintain the homes while they are going through the bid process. Homesearch is somewhere in between. I would not count on any of these platforms to secure a consistent stream of deals. Good luck with the SFR game.
@Zach Zimmer Hi Zach, I was wondering if you had any issues using their title company? Did you have an open line of communication with the title company such that you can bring them the liens list from auction.com:
"Most liens are removed after a foreclosure property sale, but certain liens may remain.Here are some examples:
- Any lien recorded on title prior in time to the foreclosing mortgage.
- First Mortgage (if the foreclosing mortgage is a second or third mortgage)
- HOA or COA assessment liens (in certain states)
- Mechanic’s Liens (in some states)
- Government liens such as state and federal tax liens, city or county liens, US Government liens.
- IRS liens (IRS may buy the property within 120 days after sale at the price paid at foreclosure sale)
- Code Enforcement Liens, Environmental Liens, and Utility Liens
- Child Support Liens"
and make sure your title insurance had coverage for these? I understand you wouldn't buy from them again, but having to use their title company did you have any issues?
Thanks & Regards,
I Can't recall how the communication was but I didn't have any title issues down the road when I cashed out of the properties and title work was completed again.