$10,000 House in Crofton, Maryland????

So you're wondering how there is a $10,000 house in Crofton? There it is, plain as day, listed in the multiple list system, $10,000 for a Crofton Meadows Townhome. It's pretty nice too, mostly original, but 3 finished levels, walkout basement, near the school, clean.

The catch is it is NOT a $10,000 home. The auction company that is selling the house has it listed for $10,000 to "get people's attention". Which it certainly has. I got a call from my girlfriend who qualifies for $150,000 and she said I have to ask you about a house I just saw listed. Of course I said, "You mean the $10,000 one?" I've already had many inquiries about that one and it's not even my listing!

We all know that most open houses don't draw very many buyers, especially when it is pouring down rain like yesterday. Well, this one sure did. The unsuspecting potential buyers thought they were going to get a real deal, but once they came by were told that this is not a distressed property, not a short sale or foreclosure. The sellers are using the "auction technique" as a way to hope to sell the house quicker and for more money than a regular sale. There is a minimum amount that they will accept and if the auction does not get up to the minimum amount, they will not sell That amount is confidential of course.

I have to say BUYER BEWARE in this type of situation. Have you ever seen the TV show "Going, Going, Gone?" It is a reality show about auctions and has featured homes in Maryland including one in Baltimore City and another in Ellicott City. They first bring in an appaiser to give an idea of the property value and then show the auction. In each case, the buyer PAID MORE than what the appraiser thought the house was worth. Why would you pay more??? The Baltimore home I believe was about $20,000 too high (sold in the low $100s) and the Ellicott City home that the appraiser thought was worth in the mid 500s, sold for around $620K.

An auction environment can get you caught up in the game of it. "Just another $1,000 and I'll beat that guy", "Oh it's just another $5,000", it's easy to get carried away.

And when all is said and done, you have to pay another 6% "buyers premium" on top of your winning bid.

If you are going to go to an auction or are considering buying at auction and you are not a seasoned investor, please bring your BUYER'S AGENT!!! They will first take you to the property, look at it, do comparables for you and tell you about what you should pay for it. Then take off that buyer's premium and you'll be at your very top bid - and don't bid more than that!

There are so many great deals available right now there is no reason to pay more than market value for a home because someone wants to play the auction game.

If it is a true auction, let's say a foreclosure auction, you can potentially get a good deal there as the property really needs to sell so the mortgage company usually just wants what is owed so if you bid more than the mortgage owed, it's yours. There again, make sure the mortgage isn't for more than the current market value of the home. In that case, you'll want to wait until the bank takes back the home and then lists it for sale. Then you can make them an offer and get a real deal.

Talk with your BUYER'S AGENT and have them help with your research - you won't believe the deals that are available today!

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