Auctioning the American Dream

We were keeping our eyes on this massive Real Estate Auction held at the Hynes last weekend. One of us attended, and were amused (?) by the proceedings. This Boston Globe article captures it nicely...

To review (see posts below), this is not an auction that a bank would conduct at the property soon after foreclosure. These showy auctions, part business, part entertainment, are designed to move homes that have NOT sold through standard auction, or regular listings through agents like me.

Should you buy a home at an Auction like this?

YES - if you look through the inventory being auctioned, and find a home you WANT. Inpect the home prior to the auction, and accept that there will be a considerable amount of work to be done. The newlywed noted in the article is a good example of this - she bid upon a home that she was familiar with on the street that she grew up on.

NO - if you are simply looking for a bargain. It's telling that the contractors attending the auction left quickly. These professional auctioneers were getting what we consider to be current market value for most of the homes auctioned.

Take a look at the auctioneer's site, as well - very interesting, and I give them much credit for doing a GREAT job at moving these homes.

Just $300 a month for a 4 bedroom, 2 bath home!!! Call Now!!

I am getting questions from some readers about the ads on TV and Radio hawking foreclosure property. (See my post below re: foreclosures to get some general background).

So I poked around a bit, and found that the rule is still true - if it seems too good to be true, it is.

Let's review:

There are a few ways that foreclosed property is sold:

1. Individual Auction (at the property) - usually listed in the local paper under Legal Notices
2. Auction Event (for a good example see USHome Auctions)
3. Through normal home sales channels like the MLS System/Realtor.com and a Real Estate Agent.

Banks and lenders give foreclosure listings to the people that sell homes for a living (Realtors and legitimate Auctioneers) in order to recoup the most money from their asset.

You NEVER need to pay for foreclosure listing information. There are 188,000 websites devoted to selling lists. And once they get your credit card info, you can be charged monthly, and it is difficult to cancel.

There is also a misconception regarding pricing. Make no mistake, banks and lenders are not "dumping" property through any of these sources. It is in their best interest to get the most money possible for the asset. It will be no cheaper to find it through a list seller online, than to speak to a Realtor, or attend a legitimate auction. Again, see my post below for pros and cons of auctions.

If you are interested in foreclosure business, speak to me, or your Real Estate Agent. We have access to all of these foreclosures, with clear titles, no tenants that refuse to leave, and information on condition of the property.

If it seems too good to be true, it is.

Buying foreclosure property

Many, many questions from all of you lately - so here are some basics:



3 types of Foreclosure Sales:

1) SHORT SALES

The homeowner has negotiated with the Lender to put his own house up for sale for less than is owed on the mortgage. The homeowner benefits by limiting the damage to his credit, the Lender benefits by not having to foreclose and sell the home themselves. This BusinessWeek blog explains further

Look for these if you:

• Are looking for a traditional sale - a nice home to move into


• Have patience - Lenders are VERY slow to respond on offers

2) AUCTION

The Lender has foreclosed on the property, and will try to unload it quickly through an auction process. Yes, it is just like you see in the movies - the auctioneer stands outside the home at the appointed time and takes bids.

Go to these if you:

• Have ready cash - often $5 - 10K in cash is required on the day of the auction if your bid wins.


• Are a gambler - many times access to the inside of the house is limited, and they are sold "As-Is."


• Have time and patience - You may be faced with evicting a current tenant, paying off liens, etc.

Your attorney will love you for buying one of these.

3) LISTED FORECLOSURE

The Lender has foreclosed, perhaps tried an auction, and now has listed it with a broker to be sold in a traditional manner.

Look for these if you:

• Are able to put at least 5% down and close in 30 days.


• Are willing to do/pay for some repair work if necessary. (These are also sold "As-Is.")

The property listed here is this type.

Oak Realty handles all three of these types of transactions. For the record, I let the experienced guy handle the auctioneer job. He's got the voice for it, too.