September 29, 2009
My last blog post was about how illogical and financially nutty it is to attend a real estate auction and place bids on a piece of property you’ve never even seen in person. One of the reader comments I received asked me a really good question. I responded to the question, but I’ll now post my response as it just might help many other prospective auction buyers that are tossing around the idea of buying through a real estate auction.
REDC auctions used to require showing a $5,000 cashier’s check just to get in the door, but the market is changing and this door amount has been dropped to $2,500. I assume this change is an effort to attract more buyers/bidders. Quite frankly I don’t know the real reason. But the lowered amount has probably increased the number of people that will now consider buying at an auction.
Keep in mind the $2,500 is only to get in the door. No, they don’t take the $2,500 check from you at the door as some sort of cover charge, but they do want to see that you’re a real buyer and not wasting their time, money and limited seating. If you cannot come up with a $2,500 cashiers check you aren’t a good prospect for a real estate auction.
There are some upfront expenses. You have to pay the deposit payment on the property right then and there…or at least right after winning the bidding. So assume the winning bid is $100,000. The first cost that is added on is a 5% buyer’s premium, which goes straight to REDC to cover their expense of running the auction. So now the winning bid is $100,000 + $5,000 or a total of $105,000. Read more
September 23, 2009
On Monday of this week I worked as a contract signer at an REDC real estate auction down in Fort Myers, Florida. Real estate auctions are such a wonderful opportunity for investors to pick up really low-priced properties to add to their portfolios. Heck, they’re great for just about any buyer with a bit of cash in their pocket. Anyone with the right market knowledge and experience (or an experienced Realtor representing them) should seriously consider checking out the next auction. Email me at firstname.lastname@example.org if you have questions or need some advice on how to purchase through real estate auctions. They are fun, fast and potentially financially rewarding.
But on to the purpose of this post. It never fails to amaze and amuse me how many auction bidders bid on properties they have never even seen in person. I can’t picture a more foolish thing to do, but it happens every auction. These buyers are expected to have done their due diligence and visited each and every home upon which they are considering bidding. By the time of the auction they should know the condition and history of the property and neighborhood. But many people just don’t do their homework and they arrive at the auction virtually blind. Read more