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Brian Kreick

How to lose $40,000, at Auction!!

03-28-08
Brian Kreick

I went to my first real estate auction today in Snohomish County. It took place, right outside in the rain and cold weather just north of the courthouse. There were 3 auctioneers with a list of homes to auction off. The first guy had 3 properties, the second had none but was making public announcements and the third had 5-10. I only saw 2 properties that were actually bought by someone at the auction for $1 over the reserve amount.

When I returned back to the office I looked up the properties on the MLS. The 2 properties that were sold were average deals, nothing to write home about. A good agent who knows what they were doing would be able to accomplish the same thing for their buyer with a regular home on the MLS. From what I saw today, most of the properties that were auction off, were not a good value.

I ended up talking at length with one of the auctioneers during one of the many breaks and he was telling a number of horror stories on what can happen to someone who has never done this before. He's seen someone who failed to do their homework and ended up buying a condemned building. He has also seen someone buy a 2nd for $40,000 only to find out the following week that the first was sold for the amount owed. This buyer managed to lose $40,000 in one week by not doing their homework, an expensive lesson to learn.

I'm not 100% sold on the idea of buying a property at auction. There are no guarantees on the condition, if its vacant and what is on title. I'm planning to continue with my research but as of now, I won't be jumping in and buying any property at auction.