US Home Auctions, Real Deal or Just a Gimmick to Sell Undesirable Homes? Part 2

On Sunday April 6th I attended the REDC, Lender Foreclosure Home Auction in Anaheim Californaia with a couple, let's call them Mr & Mrs. Investment Buyer.I began blogging on the Home Auction Concept: see my first post, US Home Auctions, Real Deal or Just a Gimmick to Sell Undesirable Homes? when "The Buyers" called me a few weeks ago inquiring about purchasing their first investment proeprty at an auction.

I began educating myself on Bank Foreclosure Auction Sales and had been recieving the catalouge each time an Auction was being held by the REDC. I had this "gut feeling" that the "Auction hype" was just that but I always like to keep up on the latest selling and buying trends in the market. Most of all I pride myself in knowing the Inventory of Homes for sale in Fullerton and especially in the Troy High School Attendenca Area, where I specialize!

When Mrs. Buyers called me I knew which property she was intereted in purchasing. Together we viewed, and made our inspections. I provided Mr. & Mrs. Buyer with the Comparable Sales Activity for the area so they could see the market trend. The property they were interested on 307 N. Hart Place in Fullerton, was listed at having a starting bid of $269,900. An extremely low price for that neighborhood. I was currently in escrow on a similar home in that area for $410,000 that was nicer but smaller. I ventured to guess at what the home would eventually sell for a little over $400,000. Mr & Mrs. Buyer was surprised by my high estimate. They very prepared to go to the auction and bid but that they would not pay more than a little over $300,000 for an auction property.

Attending the auction was a real "experience". Mr. & Mrs. Buyers and I had fun listening to the auctioneer and watching the runners go back and forth. I could see buying cattle this way or furniture but houses? The prices seemed to be jumping so quickly and I could relaly tell who was bidding the price up, if anybody. We waited several hours for our property to come up for sale. While we waited I saw Mr. & Mrs. Buyer become enlightened about the auction experience and the pricing right before my eyes!

Each home was selling for double and sometimes triple the original starting bid amount.Some homes were auctioned two or three times, I believe because the winning bidder either could not qualify or they did not feel comfortable with the disclosures made by the REDC. Often times the winning bid price "was subject to the sellers approval". Which meant that a buyer would have to wait up to 15 days to find out if the seller would accept theri offer!

When 307 N Hart Place in Fullerton came up for sale, it was on of two properties available in Fullerton. I knew there would be lots of activity on it because of the location. Mr. & Mrs. Buyer did not even get a chance to raise their bid card once it began. The auctioneer opened the bidding at $269,000 and jumped right to $300,000. Then it jumped $25K until the final bid of $420,000. Considering that the winning bidder must pay a 5% (21,000) "Buyer's Premium"as the REDC calls it, The home on Hart basically sold for $441,000!

Mr & Mrs Buyer laughed and said "Wow Tina knew right when she saw the home that it would sell for over $400K!" we all decided that it was a fun little adventure attending the auction. My opinion now that I have attended held by the REDC is the same as my gut feeling told me...it's not a scam, but a gimmick to get buyers excited about the buying process. The super low starting bids are just teasers to get a potential buyer in and qualified. The auction house is relying on the "hype" and "bidding frenzy" to push their overwhelming amount of foreclosed properties AS-IS with no warranties and they expect the buyer to pay them to do that!

If you are looking for a "Good Deal" in the real estate market today, why don't you just call an REALTOR in the area that you are looking. There are so many "Great Deals" on the MLS today. You can have someone guiding you through the negotiating process and not just yelling prices at you and you don't even have to pay a REALTOR, the seller does! You can even search the MLS directly if your agent offers "Listing Book Accounts. I opened a Listing Book account for Mr & Mrs Buyers. Now they will see all of the best new listings on the MLS the first day they are listed!

Do you have an Auction experience that you would like to share? Please leave your comments!

If you are thinking of buying a home for yourself or for an investment in Fullerton call me. I can offer you a number of tools including:

• Direct Access to the MLS
• List of Bank Owned Homes/ Foreclosures
• List of Pre-Foreclusure Sales.
• First time home buyer information
• Lease Option Opportunities

Written By Tina Maraj Shah, REALTOR SINCE 1989. 714-403-7901 www.OCREByTina.com