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Real Estate Auctions: In Your Favor Or Not

Feb 6, 2008
Everyday we watch as the rising number of bank owned properties increases. Every neighborhood is flooding with these unmaintained eye soar properties. The majority of lenders out there are not willing to negotiate on the price. I bet they just don't want to comprehend they are on the losing side this battle. There are not too many ways out there to get these properties sold to home buyers or investors. One of the biggest ways to come to my mind is live auctions.

Live auctions have general y been a great way to sale that overstocked inventory. Everything from junk to real estate can be sold at auction. They can be held almost anywhere that a microphone can be setup. The mobility of theses auctioneers makes these live auctions very popular today. They are able to setup a whole auction in front of a house in less than twenty minutes.

A great deal of the foreclosure properties all around are going to your local auction house. The lenders believe that they will be able to get everyone hyped out to bid up their devaluating properties. I have personally seen this number of times. Surprisingly people do bid up these properties significantly higher than they could purchase normally without the auction house fees included.

The majority of auction houses have a fixed percentage of the final selling price of the auctioned products or homes to be received as their payment. I have seen the typical amounts to be around three to five percent to be added to the winning bid. Always remember when bidding that you have to calculate the auction house's commission in the price. Just imagine purchasing a house at $200,000 and having to pay 5% commission now your actual purchase price is $210,000. It will amaze you how fast everything adds up.

The problem with a significant number of auction houses today is their rules and guidelines. Usually rules and guidelines are to protect the buyer and the seller but I wish that was true. Be very careful and read all of the small print pertaining to the auction you are interested in attending. Make sure you read the sections pertaining to bidding and buying at auction. You would think that the minimal bid would be the lowest acceptable price for the seller, but no it is only a teaser. In the minds of these lenders they would not sell their properties at that low of a price. The best part is they do not have to sell it for that price even if you bid up the property in question over its reserve amount. The lenders setup minimum reserve amounts for each property they are auctioning off. In the past whatever the property price was bid up to in the end was it. That was the price the property was sold for and on to the next. Did you know that if you win an auction the seller typically has seven days to accept or deny your bid? Even if you win and your bid is higher than their reserve that does not mean that you have won. The most frustrating part is that they made you pre-qualify to bid at the auction. You could have just spent your own time making offers. In the end the lenders decide either way!
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