Sorry to say it, but what a waste of an education. Park School and GW all to be a Realtor.

Thanks for the guest post!!
My sister & I went to an auction just to see what they were like a few years ago on person property and not at the courthouse. I would love to see an auction at the courthouse, but I work during the day.
Auctions are a good way to get a fantastic deal on a property but you do have to be quick, it is a great idea to get familiar with the process first.

Dear Anon,

Perhaps you should put your name next to that comment.

Good points. I believe figuring out your budget is the main thing. Most people get caught up in the process and bid more than they can afford or bid more than the property is worth

Anon, she probably has more critical thinking and problem solving skills in her pinky than you do in your whole brain...

And just what have you done with your life?

I like when people say they "won" an auction. Isn’t that a euphemistic expression for, " I agreed to pay more than anyone else was rationally willing to pay to acquire said purchase".

Nice “win”.

The converse is true as well. When someone wins a job or contract by being "low bid", I am not sure agreeing to perform a task for less money than anyone else is a win either.

Buying at auction is a headache. Let's face it. Most auctions are NOT "absolute". There is almost always a reserve price that is set by the bank who will set the minimum bid for the balance owed on the mortgage. The bank buys it back and takes it in as an REO.

If you are an investor and really want to get a deal, you should be buying defaulted bank Notes instead where you can actually get a deal for pennies on the dollar, less than what you would pay for at auction, short sale, REO, etc. Defaulted bank Notes are the rage these days.

How do you get access to the property when the homeowner is still living there? These auctions are for foreclosures, no? Even after the sale, it can take months to evict and ratify the sale. You aren't going to get financing on these properties. Cash only. No appraisal can be done if the homeowner won't let you in. No homeowner will leave until the Sheriff puts the notice on the front door. Good luck with that.

Jack, foreclosures aren't the only sorts of property being auctioned. Some folks do sell their homes or their investment property by auction, too.

Frank- what is a defaulted bank note and how do you view them?

That is true. However, the majority of auctions are foreclosure sales. Non-foreclosure auctions are the exception, not the rule.

elweedz, a defaulted mortgage Note is non-performing paper that the bank owns. When the borrower does not make payments, the paper becomes non-performing. That is a defaulted mortgage Note. Typically, you can buy these directly from the bank for a steeper discount than short sale, REO, or foreclosure. I don't want to get into too many details, but the banks are able to sell these for .10 to .20 on the dollar based on the amount of the Note. If you buy the Note, then you can either continue the foreclosure, approve the short sale, or do a loan modification where you can reduce the balance, interest rate, and amortization. Either way, you will make a substantial profit. There are risks of course. Do your own due diligence if you decide to invest in it. Most banks require Note buyers to buy pools worth millions of dollars. As an individual investor, you can buy these in smaller quantities but you will probably have to pay a little more for it.

In the last year, I worked on a foreclosure sale for a 5 unit apartment building where the defaulting owner made sure I had great access to the property because there were still tenants in the building. I was on the phone with the tenants and the tenants parents to make it as smooth a transition as possible. Sure, I've seen a hostile foreclosure situation as well, but It's important to remember that each situation is unique.

Rachel - Great primer for folks on purchasing real estate at auctions. As with any method of sale for real estate there are pros and cons. Whether it is an auction, listed with an agent, FSBO or even tax liens/default bank notes - one size does not fit all. Consumers need to determine their comfort level and priorities to decide what is best - This kind of information is a great first step.

Thanks for sharing!

Sotheby's also, I see?
BWC and I snuck into the Duke and Duchess of Windsor auction, Sotheby's NY, and were astonished at some prices paid.
Small piece of 50 year old Wedding Cake for $20,000.. China and Glass ware sets over $400,000, but it was absolutely one of the most fun things we have ever done,,, Although we were way, way, way, way out of our league, we did WIN a couple of very interesting little " treasures" at reasonable prices.
Unforgettable experience.
BP

Rachal Rabinowitz is correct in that auctions are a good way to buy a house.But i think that she is fighting an uphill battle if she wants to convince potential homeowners this.

I do interior demolition.So i sometimes go to auctions to meet potential customers.And almost everyone at auctions [atleast in East Baltimore] are investors.

There is nothing wrong with investors .They are my main custmers.But very few actual homeowners seem to want to go to auctions.

Back in the 90s a lot of people bought houses in Canton and rehabbed them themselves.Or acted as thier own General Contractor.Nowdays you dont see that as much.Homeowners want to buy a finished house. I think that a lot of people in the 90s ran into unexpected troubles while working on thier houses.And potential homeowners nowdays have heard horror stories from friends that rehabbed thier own houses

Many people did underestimate the difficulties back in the 90s.But i think that many people are overestimating the difficulties nowdays.

Personally, i would like to see more homeowners that rehab thier own homes.Those type of people are more likely to stay more them a few years. Baltimore is starting to have too many peopl e move in who only plan top stay 2 or 3 years.Places like Canton are full of them.

There is nothing wrong with thes e types of people.But a city does need a stable population.And cant depend soley on transients

Great post. I just want to add some information on foreclosed houses that the state sells at auction.

Foreclosed auctions can pay off big or they can ruin you. Some things you should know about foreclosure auctions are:

1. You can't inspect the house before the auction. You can go look at it and, if you wanna be ballsy, you can look around the outside of the house and through the windows, but no more than that.

2. You get no information on the foreclosure other than what the beginning price is at the auction. You have to do all the research yourself like finding average selling price for a similar house in the neighborhood it's in.

3. Once you buy a house, you have to find your own way into it. You're not given a key. Most of the time you can either open a window or jimmy the lock on the front door. Also, you have to beware of someone still living in the house, squatters, homeless people, drug addicts, etc., but there's usually no problem.

4. During inspection and figuring out what's needed to be done, you need to follow all regulations (like wiring and plumbing) when repairing the house. You won't be able to sell it if anything is illegal. Also, kids sometimes vandalize the house or people sabotage the house before they leave it (like filling the plumbing with cement), but it's rare.