Online Auctions

That is funny because my wife and I are headed out to one of their auctions in the morning. Guess we will know then. They have online and onsite auctions as well. They do have another that is going to be online in Febuary as well. I'll try to pm you and let you know what becomes of this.

Billy

Thanks, I would love to know how things go for you and your wife! I was just looking at there website. It looks so easy! There's a house in my town that I have been watching for months that will be auctioned online on Feb. 12. Minimum bid is $1000.00! 3/2, 2 story with attached 2 car gar.

Anxious to hear your experiance

Ryan

Hi Guys,

I'm like Ryan, have been watching a house for about 3 months. It's in a great neighborhood but didn't sell. I happened to drive by one day and they were having an open house - it needs a ton of work. They were asking $450K and given the amount of work it needs, I was thinking of throwing an offer for $90,000 at them. And then...

I saw Williams & Williams auction signs on a street close to the house. Didn't even occur to me that it might be a different house. Sure enough, the auction will be for what I've come to refer to as "my house". Starting bid is $50,000. Comps in the neighborhood are $550 - 650,000.

Thing is, I need to move out of my current place. So even though this place needs a great deal of work, I'd love to be able to pick it up at the auction, fix it up while living there, and then sell in 3-5 years when the market is up a bit. Houses on that block were in the $800-900K neighborhood before the bust.

The auction (live) is in 2 weeks. I'm going to the Registrar office to figure out how much is owed on it, etc. I was reading somewhere that you can still make a deal with the owner to buy it up to 5 days before the auction. Can anyone give me more details on this?

Equally anxious to hear other's experiences.

The auction we attended had 4 bidders at it. We just wanted the expierence is why we went. I may be wrong bt I truely believe that you can get better deals by attenting. But you always have to remember that someone else may want it really bad as well. So you do risk the chance of someone with bigger pockets taking it right away. The one we went to the couple bought it for, after closing costs and buyers premium, around $25,000. Not a bad deal at all considering that the tax value was at over $76,000. And it needed very minimum updates of around 1-2 thousand. But it was a learning experience. So we actually lost nothing. And actually gained an investor while we was there. Anyways good luck with yours.

Billy

P.s. Forgot to mention that there is a few more auction listing places listed in the your town your profit book.

with auctions. Make sure you do your due dilligence. You might be looking at house that is worth 250k and see the minimum bid is 50k. You're thinking "Holy cow, what a deal!" You go to the auction and you're the winning bidder. You paid 50k and 1 dollar. Well, after you win your bid you find out that you just bought the 2nd lien on the house. The first lien is 300k. You are now the proud owner of 350k worht of loans on a house that is only worth 250k. When it looks like an awesome deal then you need to know what you are buying. You don't get the luxury of backing out. You inherit all of the liens and the title is usually not guaranteed. Another investor told me that auctions are not for first time investors. When I have my feet wet for a few years, hook up with an investor who buys from auctions and then go to the auctions with them for a few months before buying anything. Apparently this investor did what he told me not to do and lost his shirt. Good luck...

KimmyJ
Press on...
www.tagteampropertiesllc.com

Hi Kimmy,

Thanks for the input. The auctioneers are supposedly supplying proof of Title to the winning bidder, but I am going to the Registrar's office next Monday to do my homework. If there are second or third lien holders, I'll contact them during the week to try to work something out with them pre-auction.

I don't really understand why bidding at an auction is any more dangerous than putting an offer in on a property. All the same homework goes into making sure the numbers make sense before you decide to proceed. The only danger I can see is letting yourself get carried away by the excitement that can be generated at an auction. But since I have a hard ceiling as to what I can bid, I don't see that happening. If nothing else, it will be a learning experience.

I've just had the overwhelming feeling for the last few months that this ugly house in a great neighborhood is meant to be mine. I don't know how many times I've driven past it, parked in front of it, driven around back. I've looked at a lot of properties and for some reason this one keeps drawing me back. I've visualized owning it. And now the auction. Are the odds in my favor of having the winning bid? Probably not. But then again, nothing ventured, nothing gained.

Hey guys,

I just got home from the house that I originally posted about litteraly an hour ago! I mentioned it to my realtor after I posted and he was able to get the combination for the house lock after registering as a buyer on Williams and Williams website. The house itself, in his words, was in better shape than he expected! There are still numbers to run as far as improvements because it does need work, but over all it was worth looking at. It was interesting to read what Kimmy said as this would be my first deal! But like I said, there is still some due dilligence before I make a decision on what to do next.

I also went to my first auction last week and was interested in how things worked. This W&W's auction would be online only though and my realtor said he had never done one of these before so some things to think about.

Thanks for replying

Ryan

I agree with KimmyJ7601. One friend of mine attended an auction, put 25k down on a house and ended up losing everything because he hadn't done his homework.

Read all the fine print and know the rules of the game before getting into it. Remember that auctioneers tend to excite large crowds in order to get the best price and remember there is usually a 5 - 10% buyers fee added to the highest bid.

CHECK ALL THE FINE PRINT!!!

Thanks for replying.

The house is a 3/1/2 listed at $29,000. work needs to be done to the kitchen and we think a second floor bath/ laundry is needed, but being a carpenter I would be doing the work myself. Everything ,as far as structure, looks great. My realtor thinks ARV is 60 - 65,000. Probably would not offer any more than 15,000.

I'll look into fine details of the bidding over the weekend.

Ryan

As far as I can tell, no one from Williams & Williams ever showed up to open the house last Sunday. It was supposed to be from 1 to 4. I drove by about 1:20 on my way to another appointment. There were about 10 or so people milling around the front yard, the gate was still locked. Following my appointment, I returned at 2:50. No one there, house locked up tight. I called W&W and she said she would call someone, but when I asked her if I should wait I never got a straight answer, so I left. I assume Super Bowl Sunday kept the person who was supposed to be there from actually showing up.

I had given the woman my number so she could call if someone was on the way & my email address. I heard nothing from them Sunday. Monday, I received an email from them thanking me for my interest in the property and advising me to go to their website and fill out a bidder form to bring with me to the auction. I told them I was aware of the form, but I had called because I was wondering why no one showed up Sunday and that I would like to confirm that someone will be there this Sunday for their "second" open house. The only reply I received was one apologizing for the inconvenience and that it would be addressed with their security team.

This seems to be a huge company and I'm surprised at the lack of professionalism. Has anyone else ever dealt with them before?

I would also like to here from anyone who has dealt with W&W. I will be bidding on an auction house that starts tommorrow.

Ryan

How did the auction go?

Its funny you ask. I was reading posts waiting to hear from my realtor as we speek! The auction stops in the morning. The bidding has stalled (about 52 hours) on $10,500. Listing price is $29,900. In the beginning, we agreed to sit and wait to bid to see if it would stall around $10,000, and it has! About a day or so after we thought it would. Realtor was going to call me this evening to discuss the end plan. I will know for sure by mid morning tommorrow the end result!I will definitly let you know Thursday what happens, I'm pretty anxious to find out!

Thanks for asking,

Ryan

Be very careful not to get swept away at auctions. Most bids that are won are usually rejected and sent back to the auction block. You might think that great deals are being made, but the devil is in the details. Banks are behind this sinister way of selling properties. You see, all those properties at auctions are bank owned (REO). Banks place a minimum reserve amount on each property, usually no more than 10-15% off FMV, and that's only because it's probably in need of major repairs. When the winning bid is presented to them they can reject it without recourse because it did not meet their reserve amount. The unsuspecting bidder thinks he won and goes home with a wide smile, only to get a call the next day informing them of the rejection. The naive observer starts to salivate at all the great deals and wants in on the action.

By the way, those who actual buy at auctions, well they pay almost what the FMV on the property is. They do not get deals. Banks say yes only to the ones that meet their reserve. No reason for banks to give away things that they will lose money on.

We always hear that banks are not in the property management business, but think about, banks are also not in the money losing business either. They employ the best and brightest MBAs to make them money, not give it away at some loud-mouth-carnaval-style auction.

Auctions are nothing more than hype!

The auction ended this morning about 10:06 EST with the high bidder (not me)at $18,501! My Realtor and I set a high bid at $17,000 and stuck to it. I will keep my eye on what happens next while looking into other deals. Good learning experience though.

Ryan

Should I get a realtor to show me the house thats for auction since the auction company didnt show up for that one open house. Thanks

If they are actually holding the auction at the house, they may have it open for a couple of hours prior to the beginning of the auction for people to go through. Of course, this doesn't allow you any time to do the necessary homework. If you are working with a REA, by all means go ahead and have him/her take you over to see it. This is especially important if the auction is going to be held at a different location. Figure out what any problems may be and their costs, do the comps and if you want the place, come up with a figure that you will not go over during the bidding. It's also not a bad idea to have your REA have the title company they work with run a search on the place. My REA does this for me without charge.

I was curious if you got the property and how the auction went? Did you learn anything about W&W? Have a happy Easter!

How did you get the money to start with your rental properties. What does the bank look at for buying rental properties(for debt to income ratio type of stuff)? Stephanie

I did not get the property. The bank "bought it" for $363K which is when it disappeared from the MLS before they enlisted W&W for the auction. The opening bid at auction was $50,000. After having gone through it and reading over all the reports, I figured it would take quite a bit of money to bring it to a desirable state. Among other things, it needs to be rewired, a new roof, bathroom fixtures, air conditioning, flooring (& floors need to be leveled in places), and worse of all, there is mold in 8 rooms of the house (extensive in some) so the place basically needs to be taken down to the bones, mold remediation brought in, etc. Still, at a decent enough price, given the neighborhood, it would have been a great investment. But there was a contractor bidding at the auction who was determined to have the house and ended up with the winning bid of $390K. Even though he's a contractor I think it's going to be tough for him to fix the place up properly and still see a decent profit on the backend. But it was a good learning experience.

I don't have any experience with auction houses to compare W&W to, but except the missed open house (the REA representing them explained he had been unable to make it, thought you would think W&W would have had a backup), they seemed very professional and efficient.

Hope you and your family had a wonderful Easter. I got together with friends and had a lovely day (earthquake aside - it really wasn't that strong by the time it reached LA).