Even in the best case scenario the sellers will specify a minimum to the auction house, which is the same minimum they will take if selling the conventional way. If you add the higher fees that the auction house charge, in most cases you will end up paying more than thru the regular negotiation process.
In the worst case scenarios there are some auctions out there that, like Steve said, are borderline scams.
There are of course exceptions, but in the majority of the cases the perception of the additional savings of an auction is just that, a perception and not a reality. However if you have the capacity of buying the property cash, know the procedure and have a high tolerance for risk you can try to buy foreclosure homes in the trustee's sale - but even then if the bids are too low the lien holders will bid on their own property to claim it and sell it later as an REO.
I am a native Arizonan investor, and I have been doing this for many years. Most of the information provided below is accurate. I considered listing several of my properties with REDC and their tactics are very deceiving. Their commission structure is actually higher than with a traditional realtor, and they pay more to the buyer's realtors than what I would pay them thru normal means. So, if it was because of the realtor's commissions alone the agents will be driving their buyers to this auctions - and I know of some that do!
Me and all the other sellers who list their homes on this auctions want to get the same amount of money out of them, than if sold the traditional way. And since REDC charge more than a traditional realor, the seller at the end will have to pay more on the auction.
The percentage of homes that REDC actually get sold is minimal - that should tell you something. And regarding your example below, I can show you a 100 other propeties sold as REO's (foreclosed properties) or even regular sellers for less than half of what they paid during the boom years.
Bottom line regular sales (REOs, regular owners, etc) are way better deals for both buyers and sellers than auction. At an auction you may end up paying more and might be taking a bigger risk!!!
I will give you one example. A 4 bedroom, 3.5 bath home, originally sold for $620,000 in 2005 (I check the assessor's office and verified the amount) SOLD for 280,000. If you want more information you can check out my website at http://www.buysalesresults.com
I say, do your due diligence before the auctions and then go and see for yourself if there is anything you might be interested in.....you never know!
The "starting bid" is what it says it is....a bid at which the auction will start. It is extremely unlikely that a house would sell at the starting bid. After all, the auctioneers job is to bid up the price. Most houses will also have a reserve price, below which the home cannot be sold.
There is very good value in the market at present without going to an auction and I recommend you work with a reputable buyer's agent to secure the house you want.
Please feel free to email me at firstname.lastname@example.org if you reuire any further assistance.
http://www.HudsonandMarshall.com will be in town August 24th. Phoenix Airport Marriott.
You can go to their website and look at the homes that wil be auctioned.
H&M have a good reputation. They have reasonable reserves, and some with out reserves.
Broker Participation invited, so you can have someone represent you.
I have not had to greatest experience with U.S. Homes auction.
In my opinion H&M is the only auction you need.
I went to an aution with a buyer he won the bid, however and outside buyer purchased the home at a different price.
These homes are still marketed and you can still lose out! I was a waste of time for my buyers and myself the agent!
I highly suggest to find a home with a qualified agent with experience and referrals! It will save you a lot of time!
Feel free to contact me if you have any questions!
That auction is not really an auction. Allow me to explain.
The winning bidder does not get to buy the property at the winning price. The winning bidder wins the right to submit an offer at the winning price. There are usually private reserve prices on all properties that must be met in order for the seller to accept the winning bidder's offer. At the auction company's website, you may be able to find the terms/conditions that explains this.
You may be able to find a decent deal once in a while at these "auctions." Most of the time these auctions are designed to attract the uninformed consumer. A more efficient & a more effective use of your time will be working with a knowledgable real estate agent.
If you have nothing better to do & want to be entertained, then go to these "auctions." However, if you are looking for a good deal, work with a knowledgable real estate agent.
I hope this information will help you to make good real estate decisions.
HomeSmart Real Estate
I'm not sure which auction you are referring to. I know of a couple of auctions that have been very close to scams...really not worthwhile for anyone involved, aside from the auction house. Is there a link to the auction you are referring to?