Below are 12 tips to help you come out a winner at auctions, six for large public auctions and six for those "courthouse steps" auctions.
Regional public auction steals
- Timing.
- First dibs.
- Dress (and act) the part.
- Research multiple homes.
- The pro knows.
- Market research.
Stealing a deal at regional public auctions
1. Timing: When several bidders are jockeying for a property, wait until the bids start to die down before making yours. There's no sense fueling the fire.2. First dibs: The first few properties offered often sell for less because most bidders are trying to get a feel for pricing patterns before jumping into the fray.
3. Dress (and act) the part: Some buyers like to dress like a banker and arrive early to position themselves near the auctioneer. That's so other bidders will assume they're representing the lender and possibly shrink back from a bidding war.
4. Research multiple homes: Don't miss those open houses; they typically run from one to three days. "Do your homework on a lot of properties," Friedman says. "Try to come to auction in love with 10 properties instead of just one." Bring detailed information and photos of each house you're interested in to avoid confusion.
5. The pro knows: Bring a veteran rehab contractor with you to the open houses to estimate repair costs. That will keep you from overlooking hard-to-spot damage and flaws and give you a more accurate picture of what you're buying. Pay special attention to plumbing and mechanical systems.
6. Market research: Find out the recent -- in these troubled times, no more than the past three months -- selling prices on neighboring homes. Realtors will often try to win your business by providing these "comps" that show what comparable homes in the neighborhood are selling for. To be realistic, the comp prices should factor in all auction-bought and short-sale homes in addition to standard MLS sales.
Trustee Auctions
Sean O'Toole has purchased upward of 150 investment homes at courthouse auctions, or trustee auctions. They aren't for the fainthearted, he says."These take a more sophisticated effort (than the larger auctions)," says O'Toole, founder and chief executive of ForeclosureRadar.com, a foreclosure service for real estate professionals. "They are a different animal. Five guys standing around a courthouse with a million dollars in checks in their pockets. That can be bizarre and a little intimidating."
The "notice of trustee sale," sometimes called a "sheriff's sale," will be published in a newspaper of record once weekly for at least three weeks prior to the sales date. However, you need to do your homework and then some before attending, O'Toole says.
The good news for individual buyers, though, is that if trustee auctions in California portend future price trends, those "stealing" opportunities may become even more abundant. In February 2009, 80 percent of the California properties sold at trustee auctions were discounted an average of 36.3 percent, while 40 percent were discounted by 50 percent or more, according to data from ForeclosureRadar.