Auction.com actually does REO auctions as well as trustee sales.
Please keep in mind auctions are where you buy a home as is. In some cases you do not even get to view the property prior to bidding on it.
If you are new to the auction gamem, you should attend a few auctions first and watch the process. It is a bit much to try and take on for the first time on your own.
Most of the homes sold at these auctions go to deep pocket investors, who have reps at the auctions weekly bidding on and buying properties fro them. Also note Trustee auctions are CASH sales. Some REO auctions do allow financing.
You should also note if you buy a home at an acution with liens on it, you own the liens too.
So do your homework. Find out what homes will be up for auction, select the ones you hope to bid on, get yourself a nice rep at a local title company, and have then run a tilte report on the property. There will be a fee , but it is worth finding out if a home you hope to buy at auction has any clouds on the title.
Best of luck to You.
Kawain Payne, Realtor
Okay, so let's talk for a second about Auction.com and about buying foreclosure homes, since I know your last questions have been solely about foreclosure home purchases. First, I just finished talking with representatives from Auction.com and reading their extremely extensive FAQs about their service. It's actually a very interesting model, and for those of us in the real estate industry, Auction.com does provide commissions to agents who bring their clients to the site and who purchase homes through this website. So they've thought of "everyone" that might be involved in a transaction, and have given incentives to agents to promote the site.
So essentially there are two main types of purchase vehicles to the Auction.com space. The first is a "pre Trustee sale" auction, and the second would be a "post Trustee Sale" auction. The first version is NOT a live auction but one in which the buyer is allowed a maximum of five attempts to buy a home at the seller's "threshold" price before the home is sold in a Trustee sale. This price would need to take into consideration the value of the foreclosing lien holder's claim plus any other indebtedness on the home that might survive a pre-auction purchase. Once a successful price is negotiated, it appears that Auction.com will help both the buyer and seller complete the transaction and stave off the trustee sale.
The second type of auction conducted by Auction.com is the post Trustee sale auction in which Auction.com conducts "live" auctions for banks and trustees. In this case, only "registered" users who meet specific cash and money requirements can be present to bid on a home. This is all live, so whoever wants to participate must plan to attend an auction at a specific location, date and time. In this case, it's a "real" auction, so buyers should plan to buy in person up to their preapproved amounts.
In all auctions, however, Auctions.com makes it very very clear that they:
1) provide NO guarantees whatsoever regarding the condition of the home
2) buyers can only buy homes with NO contingencies--so if you agree to buy, you cannot get out of it
3) no cooling off period--once you agree to buy, you're stuck even if the house is falling down--you bought it
4) auction.com is NOT a totally free site to buyers . Buyers agree that their "final price" will include a 5% fee to auction.com for their efforts in coordinating the sale. So if you buy a $200K home, for example, then you'll pay $10K to auction.com for their commission for a total purchase price of $210K for the home.
The advantages to this site, however, is that you can see ALL of the foreclosure homes for sale in an area on just one site (for free) and that's pretty cool. You can purchase a home on auction.com withOUT having to pay all cash for the home (as you would in a trustee sale). Sometimes--not always--the bank may consent to allowing the home to be "open" for review by the buyers, whereas you'd be buying "blind" in a regular Trustee sale. For the live auctions, you're buying from the bank, so all of the post foreclosure liens have been wiped clean--that would NOT be the case in a Trustee Sale on the court steps. So again, cool...
If buying a home without warranty and with no way to get out of the contract even if the house is collapsing seems appropriate to you, then auction.com is certainly a good way to get a house. Keep in mind, however, that there are ALWAYS inherent problems with buying a foreclosure property. You can minimize the problems by working with a Realtor even if you choose to work with auction.com. At the very least the Realtor can pull a preliminary title report for you on any pre-foreclosure properties and can go with you to help assess the value and conditon of homes prior to foreclosure auction.
So, again, Erika, don't do this alone. Get an agent to help you!!
Area Pro Realty-People's Choice
Tel (408) 426-1616
415 216 9206
Keller Williams Realty Los Gatos
I was the "winning bidder" on an auction and thankfully did some research before actually signing the contract and sending the earnest money. What I found scared the heck out of me.
In my case the Seller of the property was NationStar. The property had been foreclosed on by B of A and B of A had sold the mortgage to NationStar but never transferred the title.The title itself was actually still in the name of the foreclosed party and B of A had never completed the title work to take possession of the property, probably because they didn't want the liability of the upkeep.
After jumping through the hoops at Auction.com I was told that this often happened and that the title attorney was working on the title and it should be transferred to B of A this week. I was also told that NationStar held a power of attorney for the property. I asked for a copy of this POA and told Auction.com that I could not enter into an agreement with a seller who did not hold title to the property. Their response was that without a signed contract they would have to realist the property, and would not provide me with a copy of the POA.
Their contract is completely one sided and dangerous from a buyer perspective. If you are contemplating buying a property have your attorney look at it. Once signed you have no recourse against auction.com or the seller (primarily NationStar mortgage) for performance of the contract. The contract also has other issues
- You state that you have had the sufficient time to inspect the property when none is allowed.
- You have had the opportunity to examine all title matters and waive any rights in this area.
- The seller may be selling the property "land only".
- Buyer has read, received, and approved a copy of a preliminary title report and the recorded master deed which are NOT provided when asked for.
- Seller has no obligation to remove any title exception, bear any expense to convey a clear title, otherwise make the title insurable.
I can go on and on about this one-sided terrible contract.
I believe it is illegal to attempt to sell a property that you do not hold title to and will be checking with my local Attorney General on the subject. I have purchased literally dozens of homes at sheriff auction, from private sellers, and through other REO services and will never use Auction.com again.
If I have chance to bid at auction.com again, I will. We have to do lot of title search and all cash in hand. .
Real Estate eBroker, Inc.
Thanks for the post. Just one note...three years ago was early 2009, which was about the bottom of the market (the official bottom being about October 2008) so the environment was far different than it is today. The market has recovered and banks have gotten both smart and savvy about selling homes. They are no longer willing to "dump" homes for less than close to market unless the property is damaged. So again, be wary and careful when buying. It's not nearly as easy nor as lucrative to buy foreclosure homes today.
I'd attended a private auction (Williamsauction.com) more than 3 years ago, and I bid on the house I am living right now. They also charged me 5% broker commission. I bid in front of my house on the day of auction, and that was the first time I saw my house.
The house turned out to be very nice now, and I'm happy with my choice.
I am closing my house anytime soon, and want to bid another house again.