Online Auction Strategy

[John Shortridge]

Hi everyone,

Hopefully will be bidding on my first auction property this weekend (homesearch.com). I have read up ALOT about these deals. There are a lot of horror stories however usually there is at least someone in each thread who chimes in: "While everyone is griping about their bad experiences, I've been closing good deals".

Anyways, for those folks who have done these, are there any strategies you have for bidding on these? Is there any real point in bidding prior to the last day? I know some, Hubzu, homesearch.com, will bid the price up on behalf of the seller. Any experience here? 

In my particular case, they have the property listed on MLS at 105k, (which I'm assuming is their reserve, they wouldn't entertain a proper offer btw) which is at least 15k off where it needs to be. Also, this has some things that look scary at a glance (foundation, brick cracking) but my experts say it's actually no biggie, so I'm hoping there is less competition because of that.

Thanks for your help!

Johnny

[Chris Simmons]

I have two strategies that I use depending on my level of interest.  Both assume I thoroughly inspected the house.  I don't bid without seeing it first hand. 

If my level of interest isn't such that I really really want the house or that my schedule will allow me to be online at he scheduled end of auction time, then I simply calculate my max purchase price and set up the auto bid and walk away.  Then I remind myself to quit using run on sentences.  You set your price like with any other investment property but have to add in all the buyers fees charged by the auction.  

The auto bid works just like on eBay and if you win, you win.  If you lose, someone was willing to pay more than you so more power to them.  Maybe they know something you don't, or perhaps they don't know as much and that's why they possibly paid too much. 

For properties I really want, I wait until the last minute and as long as I have not already been outbid, I start bidding.  They have a rule that if another bid is made in the final 15 minutes, they extend biding by another 15 minutes.  You can't bid last minute and surprise someone like on eBay. I used to hate that it gives others more time to bid against me, but I learned to use it against them.  I do it to draw the auction out longer and wear them down. It will tell you what your next bid needs to be, so with about 1 minute left I bid it up just enough.  Then they can bid again.  I go and make some popcorn and wait for the clock to tick down to the last minute again before I bid it up just enough and put 15 more minutes on the clock. 

I don't have any real proof this works and I may have to admit that I really need to see a therapist, but for now I will continue to believe that people actually give up against me because it's an hour and a half past when the auction was originally supposed to end.  Maybe I don't know as much as them and am paying too much.  I don't think so but my wife does say I am crazy.  

Anyway, this is how I have approached hubzu auctions so far. More often than not, I get outbid.  Often before I even make my first bid.  But I have won a couple auctions and I would like to believe its because of my strategy of slowly wearing the competition down with my slower than molasses bidding.