Recently, I went to a live residential properties auction for the San Francisco Bay Area. When talking about house auction, most people think of court house auctions or trustee’s sales. There, all foreclosures properties have to go through that process and will be sold to the highest bidder or be repossessed by the banks. The problems of trying to buy a house at court house auctions are 1) Houses usually get pulled out at the last minute. It is hard to do the buyer’s investigation ahead of time. 2) The starting bid is typically set at the balance amount which is usually way above the fair market value. 3) You need to pay cash for such properties. All these 3 reasons make auctions feasible only for seasoned investors.
The auction I went to was a bit different. First it was an auction of bank owned properties of about 70 properties. That means these properties have gone through the trustee’s sale. Many have been selling as bank-owned properties for awhile. When they don’t sell, banks seek other channels such as internet bidding. While it still doesn’t sell, then it is sold in the live auction. Second, financing is available for a subset of properties through Fannie Mae Homepath or another national lender. Third, all properties to be auctioned will be posted for weeks ahead. Disclosures are posted online and they have the open house available for inspection.
Last, you can bid at the comfort of your home via live webcast. Below is the screen shot.
You can listen to the live streaming of the auction with only sub-second delay and bid anytime with a click of the button. It’s much more pleasant than sitting for hours at the live auction.
Before you jump into it, there are also some warnings. All properties are sold as-in, where-is. You have to do your own due diligence. And some may still be occupied and it’s your responsibility to evict the occupants. And there are still reserve prices. The one I went about 40% of properties went into contract. That means the winning bid met or close to met the reserve price. You have to pay attention what the auctioneer says at the end of the auction to know whether the bid has met the reserve.
If you are eager to try but are not sure how, you should go with a realtor who is familiar with auction as your bidder’assistant. If you want to know more details, ping me.
Disclaimer: The writer is not associated with any lender or auction house. Readers should do their own fact-checking.