Auctions?

[Jonathan Beemer]

I would like to know the benefits of auctions to buy properties? Also, what are the chances that the average house sells for minimum bid? I would pretty much like a walk through of a real estate auction. Thank you!

[Angie Williams]

HI Jonathan, There are many types of RE auctions you are able to attend and make bids on homes in foreclosure.  Do you have a specific type of auction in mind? Online vs. Live auction? Tax auctions, Bank owned, Judicial auction, Personal Estate auctions,etc.?

I bought my second and third home at a Sheriff's auction on the same day I attended the auction. It's called a Sheriff auction because in some states (Philly,PA in my case), the Sheriff manages, conducts and holds these foreclosure sales. Now with that said, this is my own opinion and experience I wouldn't buy from another live auction ever again. It is very risky and because you just won that bid on what you seem to believe is a great investment in actuality you really just lost.

  Quick example, you are not allowed inside the home prior to bidding. You are allowed to drive by the desired home,but that's the most of what you can visually see. You have no idea what is behind the exterior of the home, and those walls inside that you weren't able to view could be telling a very different story then the exterior you thought looked like a great investment. Wow, ill never forget when I won that bid on this one property I loved. I was so excited to run to the house and see what I had just purchased. But, that never happened because I had no idea there was a pregnant 23 year old squatter living there with her 3 kids and a viscous heroin addiction.  It took 8 1/2 months and $4,800 later to remove her from MY home. The second property we purchased was a great investment, we had a couple of issues with our contractor but that had nothing to do with the auction. Although, I still feel we over paid by close to $9,000, and that's only because the other person bidding against me was a rep from the bank for the foreclosed home. 

 But I have heard both horror and success stories. That was just my story. If you do decide to buy at a live auction, make sure you find out specific dates. because if you want to attend a live auction, its smart to go a couple times prior to buying and just as an observer. When it is time to purchase at an auction, DUE DELIGENCE!! Do a ton of research on desired homes, area, buyers, lenders, auctioneers,  and go there with cash/cashiers check in hand (because you are going to have to pay full amount of bid, all auctions vary) I had to put 10% down at the auction and had 3 business days to pay off remaining balance. So make sure financially you are ready to fork up the full amount, the payment grace period is fairly short.

Best advice, I wouldn't jump right into it blindly and end up with buyers remorse, which I have seen happen many of times to fellow investors. Don't get caught in a bidding war that you are determined to win, because in the end you really may have just lost. Always, determine a final price you wouldn't go above and don't bid any higher then that set price. It is very easy to get lost in the moment while bidding, basically due to your adrenaline rushing, excitement, anxiety, and sometimes irrationality when having to make a split second decision when your bidding. Anyways, I have more advice if needed, just wasn't sure your intent of auction. Hope I helped a little, again my story may be very different from a story of success.