is it save to buy an auction property? What are the Pros and Cons?

Asked by Joyce, Northwest Torrance, Torrance, CA Tue Jan 4, 2011

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Kawain Payne, Agent, Seal Beach, CA
Sun Mar 25, 2012
Auctions can be brutal. Make sure you do your homework.

Get the address of the property you plan to bid on prior to the auction date.

Contact a title company and have them do a complete report on the proerty. You will want to know if their are any liens on the property, as they will become due and payable by you if you are the winning bidder.

Also keep in mind you are more than likely buying the home without the benefit of an inspection. You are buying "as is" and sight unseen. You need to have cash reserves for repairs if needed.

If you are up to the task, just have proof of certified funds, report to the auction and bid.

Best of luck to you.

Kawain Payne, Realtor
0 votes
Dp2, , Virginia
Tue Jan 4, 2011
Buying any property--whether or not obtained via an auction--involves some amount of risk. The more one knows about the process and the target property/properties, the more accurately one may develop one's risk model.

Auctions are the domain of the professional (often institutional) buyers. Problems arise occasionally when inexperienced buyers try to approach buying at auctions like regular, retail sales. The two processes are completely different.
0 votes
Jamison and…, Agent, Tahoe City, CA
Tue Jan 4, 2011
Joice,

A personal anecdote:

My wife and I, who have been in the real estate business combined 20 years, found out about a great home in our area going to auction. We wanted to personally purchase the home, and started doing our homework. Using all of our resources and putting in several days worth of work, we realized that the more we learned, the less we knew. We started out thinking it was a black and white deal, but quickly found out it was mostly a grey area. Standard inspection time and due diligence periods were non existent. Even my wife, who is an attorney as well as a broker, was not completely clear on the rules and regulations associated with auction.

I have faith in the residential purchase agreement contract. It has been written, and re-written, to protect the consumer. Purchasing a home should be done with caution and with help from inspectors, attorneys and licensed Realtors.

Good Luck!
Jamison H. Blair
Team Blair Tahoe-Tahoe City
530-277-8654
0 votes
Rebecca Cham…, , Palos Verdes Estates, CA
Tue Jan 4, 2011
Depends on your definition of "safe." Pros: You can get a great deal

Cons: You will be bidding against investors, who often bid up a property so it isn't such a great deal
You don't have the opportunity to inspect the property before purchase usually so you don't know what problems might exist, you have to have all cash, if the property comes with a lean, it becomes your problem. Also, you have to show up the day a property is to be auctioned and they can be postponed multiple times, there isn't any way to know except showing up each time, so it can be very time consuming.

So, yes, you can get a deal but you can also get a deal in a standard purchase or in purchasing a short sale.
0 votes
Monique and…, Agent, Beverly Hills, CA
Tue Jan 4, 2011
Hello Joyce,

If you have all cash you can buy at auctions. A great site to track auctions is Foreclosure Radar .com but unless you know how to research the title you can purchase a property with out clear title and other liens. Also you aren't able to go inside and view the home prior to purchase at a Trustee Sale/Foreclosure Auction. Your best and safest bet is purchasing and REO/Short Sale. If you want to be sent any of these properties, let me know what your looking for.

Best,

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Tue Jan 4, 2011
Joyce,

There is a saying that goes around about auctions and it goes something like this: "If you are not a professional investor and you got a good deal on a property at an auction, you didn't get a good deal."

Personally, I don't know much about auctions, but know enough to heed the wisdom in that sentiment. I would go with the tried and true --- hire a great Realtor, learn the market with their guidance, and allow them to use their expertise to your benefit.

Good luck,

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes
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