Purchasing a home at a foreclosure auction used to be a good way to get a bargain on a house. Times have quickly changed because more and more people have become aware of these auctions. The perception of being able to get a bargain has been further bolstered by the all time high of the housing market. Also the challenge of purchasing a home at auction is the added risk. When you purchase a home at auction you provide a non-refundable deposit upon winning the auction without ever being able to set foot inside the property to inspect. In addition to the questionable condition of the home, a buyer must beware of the possibility of liens filed against the property or the presence of occupants who do not want to leave even after being asked to do so. It has been a part of my job working with Burns Realty & Investments to help balance these concerns with the amount that we are willing to bid in an auction on behalf our clients.
At Burns Realty & Investments I have had the opportunity to attend these auctions and have been able to bid on behalf of some of our clients. After going to my first few auctions, I started to notice the same familiar faces time and time again. Most of which are bidding on their own behalf as investors and are looking for their next project. Almost every auction I have been to, the ultimate sales price has exceeded my predetermined maximum bid amount by about $10,000-20,000. In some cases even greater. I have spent a lot of time wondering what is driving these prices so high even with the greater amount of risk involved. If going to an auction is supposed to be a good way to get a deal on a house, why are so many people paying these premiums?
One major reason I have been able to come up with could be the popularity of reality TV shows that feature professionals who flip houses and make a lot of money. Without getting any real experience, some people think they can go out and do it too. We have actually witnessed a handful of these novice investors get into trouble in this way and have seen them sell at a loss just to cut their losses. Thankfully our clients have the benefit of our firm’s three decades of investment and construction experience to fall back on. These auctions can be a profitable venture but it comes down to knowledge and experience in navigating these treacherous waters.
If you are considering purchasing an investment property via auction or any traditional method contact us today and lean on our years of experience. You have nothing to lose and everything to gain!