Tips for first time Auction goer

[Clayton Miller]

So I'm going to my first home auction tomorrow. Older gentlemen died and his kids are auctioning off the home and everything in it. I want the house of course and need some tips on how the bidding process works. Do we go in and bid our highest right out of the gate? I've already walked through it and know it's a good buy for the right price. Do we wait and bid in 1,000$ increments? Do banks come to these? Do we wait and bid at the end or do we bid early? What are the best ways to go about it? Thanks in advance.

[Account Closed]

Here is an answer to a post I recently wrote - maybe some of these points will help you - You might want to talk to the PR before the auction to see if they would accept X -$.

If you are the high bidder - see if you can get immediate possession of the property - tell the estate you want to clean it up so that you will be able to get a good appraisal. 

One of the options you have - if you get immediate possession before settlement - is to market the property for MORE than you paid for it - you could make a quick $10-20,000 within a few weeks - there are lots of moving parts in this technique - but if you call me - I will give you some ideas.

I own a Auction Company in Baltimore. I may be able to give you some insights and suggestions - we flip real estate nationwide using the auction method of marketing.

All auctions are sold in "as is" condition for all cash - that is the transaction is NOT contingent on financing.

You should contact the auctioneer for the terms of the sale. Have them mail you a bidder package so that you have time to read and understand it - it will contain a sample of the contract you are expected to sign if you are the successful high bidder and it will also have other disclosures in it.

IMPORTANT --- Have your financing lined up - Be ready to do business

You should have a credit line - so that you are able to write your own loan. Alternately put together a friendly joint venture - where your friends or relative agree to contribute X $ to be used for real estate investing.

Go look at the property (ask auctioneer if you can get in before the sale - NO not an hour before - well in advance of the sale) is it vacant - needs work - can you get inside?

Try to contract the sellers - maybe you can make a deal before the auction - and cancel the auction and cancel your competition.

• Maybe buy it subject to the mortgage from the sellers.
• Look at other listings in the area - get a good feel for values
• When at the auction (provided your cash is lined up), don't jump to start bidding -

wait for the process to start - see who your competition is first - listen to the stated terms, talk to others at the auction - get cards and names - ask "what do you think it is worth." don't bid until the last seconds if that last bid was within the number you want to pay.

There are times when other bidders will be vocal about the needed repairs as they inspect the property - they do this to discourage their competition. Pay them no attention.

• Is it a reserve auction, an absolute auction - foreclosures - tax sale etc. get the answer to that question
• Play Dick Tracy (if you know who he is) find out WHY it is an auction sale; back on payments, estate, owner ordered auction?
• If it is a F/C - why - how many payments back
• You need to track down the owners - ask - WHY - make an offer

If it is a F/C and does not sell - go directly to the Trustee to make a cash offer -

• Talk to the neighbors - ask WHAT'S THE PROBLEM - be a problem solver.
• Contract the lender - if it is a non-performing mortgage - ask if you can buy the mortgage.
• You have enough time - get to the BOTTOM LINE as fast as you can -
• Make sure you are ready - have your funds available
• If it was listed talk to an agent - get the listing history of the property - was it listed - for how long and how much - how often has the price been reduced and how many days was it on the market?
• Talk to the listing agent - he will be able to give the history and maybe the owners name and contact number - always ask - "Are you still accepting offers on this property?"
• WHERE TO STAND at the auction - make sure you are parallel (on the same plan) with the auctioneer - so you can see what he sees - you want to make sure that the bids are real and not ghost bids -
• Fee free to stop the bidding to ask questions - you want to slow the process down -
• If someone is bidding against you - it is OK to ask if that bidder is qualified to bid - do they have their cash or certified funds?
• If there is a no sale - ask the auctioneer for the contact information of the seller - trustee or bank representative. Contact them.
• Get to the auction early - park where you can see who is getting out of the auctioneer's car - sometimes they will bring a straw person to RUN THE BIDS - that is to get the audience excited and to bid - often times there are no bidders and the straw person trys to get the audience excited about bidding.
• If the auctioneer or their associate is on the phone during the auction - sometimes they pretend to have a bidder - you have a right to ask who they are and if they are qualified to bid - probably not!
• Call the auction company in advance of the sale - ask what the reserve is - how much will they accept now if you make a cash offer?
• Ask to be on the auctioneers mailing list.
• Get pre-approved with the auction company to use your personal or business check.
• Ask the auctioneer if they will pay you a referral fee if you can get them some business. Any deals you can't make - refer them to the auction company and make a fee.
• Always look for PROFIT CENTER opportunities - referrals fees from investors or others - always be alert to profit opportunities.

IDEA for cash flow ----- Work a PIGGY BACK PROGRAM ---- get on all mailing list of auction companies in your area - where there are auctions that are being held in front of the property --

• Contact owners of properties in the neighborhood where there is going to be an auction - Script: letter or in person - "As a public and private service - I wanted to let you know there is going to be a real estate auction at 123 Main Street at 2 pm - you may want to attend - if you would like to sell your property at 2:15 pm I can make that arrangements for you - oh - there are no commissions or settlement cost and no advertising fee."
• Refer that deal to the auction company or make an offer on the property.

So..................... I hope some of these ideas will help you the reader - it is OK to call if you have questions or if you want to do an auction deal in your community.

Bigger Pockets is a great place to learn these exciting money making ideas.

Charles