my answer is VERY CAREFULLY! If you are an experienced investor, this isn't a bad strategy. If you are not, this is fraught with problems. also, you will need cash in most cases - yes, the entire amount. I would attend a few on the courthouse steps in your county to see if you want to venture forth. Otherwise, hire a real estate professional. many homes are listed on the MLS. Be sure your agent knows how todo this and has done it before. Caveat emptor!

Wed Mar 26 2008, 15:36

A quick observation:

Hi is both right and wrong. He's right that auctions aren't always a good deal. They can be, sometimes, but with certain types of reserves you may think you've won, only to find out that you haven't won at all. And, as noted below, you're buying in "as is" condition. You've got to come up with a chunk of cash to bid, and the remainder fairly quickly after that.

But sometimes Realtors do make money on auctions. In fact, some of the auction companies are run by Realtors, or have Realtors on their staffs. For instance, check out Tranzon -- http://www.tranzon.com/ -- and Auction Brokers -- http://www.auctionbrokers.net/ .

Further, as a Realtor, if I refer a seller to one of these auction services, or another, I'll receive a portion of the commission.

Auctions have their place. Just make sure you understand the rules before you plunge in.

Good luck.

Wed Mar 19 2008, 12:03

Hi Jill,

Lots of great advice here from other people, but I just wanted to add onto the response made by "Hi-from Virginia" posted below.

The part about auctions not always being a good deal is true, but I don't want these comments to steer you away from making up your own mind on this.

What I would like to caution you on is that most often an outside of a house may not reflect what is behind those walls and you usually do not have an opportunity to inspect before the auction and your ownership.

Many times happy bidders (buyers) get the home days beyond the sale (varies according to state laws-WA. is 20 days) . Once inside, they find that the interior has been so severely damaged that it requires extensive re-permitting to make the repairs.

More homes are also found with some sort of bobby-traps installed, one resulted in an accidental shotgun death of the very person who installed it and accidentally tripped his own trap.

In one near Bonney Lake area neighborhood (Pierce County) years ago, the house was found full of dangerous snakes. Some of them were dead from starvation but many were still alive and active and had escaped from their cages in search of food since they were left abandoned. One snake was over 15' and cornered the new owner before she smashed through a window to escape.

On occassion, homeowners who have faithfully paid for 20 years wind up in foreclosure and as it approaches, they become angry at the loss of all of their equity over a few missed payments-often that anger is taken out on the house.

In one case, an angry homeowner had a mysterious electrical fire about 15 minutes before the auction. while the fire department was putting out the last few sparks from the now half burnt down structure, an unsuspecting person had made the successful bid and became the new owner.

Can you imagine the surprize that they got as fire trucks passed by them as they left the the scene of their new smoldering house. Guess who got the insurance money and guess who lost out? Yep, the foreclosed upon owner was compensated for the "accidental" electrical fire because the alarm came in prior to the auction and they were still the owner.

Before considering any house offered at an auction-DO YOUR HOMEWORK and make a deal with the occupants for a cash for keys deal!

Wed Mar 19 2008, 11:53

Hi Jill,
I have provided info to buyer clients on comps that they have used when attending an auction sale. There are many Realtors who will do this.
Deborah

Tue Mar 18 2008, 16:05

pssst, jill
if you buy at auction, the
R
E
A
L
T
O
R
S
do not make any money
ssshhhhh, they're going to give me the thumbs down again.

anyways auctions are not that good of a deal.

Tue Mar 18 2008, 16:02

Auctions are risky unless you really know what you are doing, and take the time to check out the property. You buy it "as is where is" most of the time, meaning you bought it no matter what may be wrong or not wrong with it. In our town at least the auction homes are listed on the master commissioner website for the public to see well in advance of the auction. However you have no right nor does the person living there have to allow you, to see the property beforehand. It is trespassing. I found that 1. Buying them before the auction if possible which also has its pitfalls and issues, or 2. Wait until it sells and often the lender buys it back and lists it with a REO listing agent, then it is treated more like any listing you can with your own agent or the listing agent go in and view it, inspect it, and hopefully make an more safe and informed decision. But the risk/reward ration may be not as attractive this way.

Tue Mar 18 2008, 15:38

Buying at auction is risky biz, and not recommended for novice investors. These are high risk purchases. While you might do well, you might also lose substantially.

Study. Know your comps, Set your limits. Have a keen broker by your side providing you current data and market conditions.

Tue Mar 18 2008, 15:27

Hi Jill. You start by finding a good reputable Realtor in your area to help you through the maze of this sometime difficult and very educational experience. You can hire your agent by contract, a Buyers Representative Agreement, so it will insure that they get paid for the work they do for you. Foreclosures are much much more work than the average real estate transaction because of the nature of them. What I mean by that is, analyzing each property for you, until you finally find one that you like, and then missing it because someone else was willing to pay more for the property than you and your agent feel that it is worth. So you might miss a few before the one sale is successful. Make sure that the agent you choose is very familiar with the process and knows where to find you the money, because you must pay with all cash on the courthouse steps on the day of the sale. There are lenders out there that will advance you the cash based on 25% down and your credit worthiness. Many of these foreclosures the buyer is unable to see the interior before making there offer and usually no inspection of any type is allowed before the purchase. These types of sales are not for the faint of heart. Good luck in your endeavors. Dan

Tue Mar 18 2008, 15:23

Better to buy it from the bank before it goes to auction.

Tue Mar 18 2008, 15:02

Hi Jill,

Buying at auction is not for the faint of heart. If you are looking for a deal, then I would suggest that there are other ways of purchasing a property.

You will not (normally) have any chance to inspect the home prior to the auction and there is also a (small) likelihood that you will have to evict the current owners or their tenants.

The auction is also very competitive and you will be competing against seasoned investors and agents in your purchase.

The foreclosure auction in WA requires cash to be provided at the time of purchase, so if you have access to funds, then you can bid. You need to show the auctioneer your funds to qualify for bidding. There are ways to get funds prior to the auction including tapping into your home or investment equity lines or hard money loans (expensive, but available)

Finally, the list of homes going to auction changes every hour up to the auction. There will be times that you arrive at an auction and the home is scheduled to be sold and then half way through the morning, it is delayed/postponed/canceled.

I hope this helps.

Tue Mar 18 2008, 14:22

Hi Jill,
I can't do much bettter than Jill's answer with the articles that explain the process. Many folks are unable to take advantage of auctions because they need to be bidding with cash in hand. Sometimes the best home prices come in th pre-forclosure process. These homes are sold as short sales, and offers are made just as you would on any home, with a purchase and sale agreement. This agreement is subject to bank approval and takes a while to get that approval, but often times the bank would rather let the property go even cheaper than you could get it at auction, to avoid the expense of foreclosing. In a short sale, you can include a financing addendum! Call your agent for help with this process.

Fri Mar 7 2008, 20:25

Jill....

Auctions stir up a buying frenzie! Many people are not aware the sellers of the property many times place a reserve bid ont he property. The auction houses offer an extremely low price to get the people in and it the bid never reaches the reserve price property does not sell at auction. Multiple people bidding brings up the price and it can be a frenzie.

If you are considering buying at an auction take a professional Realtor with you so they can explain the process.

Fri Mar 7 2008, 20:24

Hi Jill,

Last December the Seattle Times had a very good article that you will find interesting about the foreclosure process:

http://seattletimes.nwsource.com/html/realestate/2004086535_…

In September 2006 there is another interesting article that you should also read:

http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/…

Overall, it's is a process that does take the williness to learn, investigate, cash on hand, and the ability to not be emotional about the house itself....which is why investors tend to buy property at auction. This avenue to buying property also works for those who are willing to put in the leg work, and time to make it successful for them.

Best wishes on your investigation into buying a foreclosure home!

~Deborah

Fri Mar 7 2008, 19:30