First Auction!

[Ryan Billingsley]

We run a successful direct mail campaign with Jerry Puckett.  We received a call about a property that was up for auction.  The property was sold as is and it was the sellers late parents home.  It is in a great rental area and is a well preserved time capsule.  As a rental it does not need much.  We decided to attend the auction.  This was the first time we attended an auction for a property.  

The house is a 2/1 900 sqft. SFR near a college. The ARV is 114k retail. As a flip it needs a complete update which consist of mostly cosmetic repairs. It would also need a new roof and new windows to get top dollar as a flip. As a rental it was almost turnkey.

There were 5 bidders involved in the auction including me.  We ran the numbers and decided we would pay a maximum of 60k for the property.  The auctioneer started the bid at 75k!  I was shocked that it started that high.  No one bid at all.  Finally one person bid the minimum of 75k as the auctioneer kept on with his fast talk. He kept going asking for 80k and no one responded.  He even said " Do people know what houses sell for around here?"  expecting a much higher bid.  

The auctioneer finally gave in and the property was not sold because the minimum bid did not reach the seller's minimum and everyone left.  It was a weird experience!  Is this normal? 

[Mark Bookhagen]

It can be normal. The sellers set a "reserve price" with the auction house, which is starting bid. The sellers did not want to sell the house for less than the starting bid.

[Ryan Billingsley]

@Mark Bookhagen

I was surprised that it started so high and it was over so fast.  It felt like a minute and the auctioneer said no sale have a good day!