Posted by James - Mich Investor on October 13, 2007 at 05:01:14:
John,
I bought one of them thar houses before. Not a bad price - $16k Got out of it for just over 18k though.
The biggest downside is the ‘auction mentality’ when it comes to price. People bid for more than they should just so they can get the house.
If it stays in a good range, it would be a good investment.
James
Purchasing a home at private auction questions - Posted by John in Michigan
Posted by John in Michigan on October 12, 2007 at 13:19:31:
Last weekend in the sunday paper there was an ad for a home locally that will be auctioned off next week. The auction is going to be held by Williams Auctions at the home. The opening bid is $50k with like homes in the area listed in the 300k region. Home was built in '05. Carpeting, kitchen counters and apliances, furnace and a/c, hot water heater, misc trim and doors all gutted. Seems like a builder came in and tried to recoup his losses? I would like to attend the auction on an educational basis. I am wondering how you would find out what, if any liens are on the home? The auctions states that home is sold with insurable title. Auction fees are 3k + closing costs along with 5% down to highest bidder, 30 days to close. It would make a nice home to move into for a year and do the work yourself and sell. I know I would be paying short term capital gains tax though. What are some things I should look into?
Thanks!
Re: Purchasing a home at private auction - Posted by Natalie-VA
Posted by Natalie-VA on October 14, 2007 at 08:31:48:
John,
First, as others have said, don’t catch the auction fever and pay too much. Second, I wouldn’t worry about doing a title search prior to the auction since they’re guaranteeing insurable title. Make sure you buy owner’s title insurance at closing though.
You can fix the tax problem by staying there for 2 years instead of 1.
Make sure you have the appropriate financing lined up. Many conventional lenders aren’t going to loan money on a house without appliances, carpet, etc.
–Natalie
Zuctions - Posted by Rich-CA
Posted by Rich-CA on October 13, 2007 at 17:51:52:
I went to a Treasury auction in Phoenix a couple of years back. There were two sets of bidders. One had notepads and stacks of paper (comps, budget figures, etc.). The others had a glazed look.
Before the auctioneer circulated and ask the people with file folders and clip boards what their max was. The highest of these was the starting bid - saving the time of starting from the minimum. After the first bid above this, one set of people checked their notes, some recalculated a few numbers, lots of heads shook “no” and the people with the papers faded towards the back. The property eventually went for $20k more than the same floor plan just one block away was listed for (one participant had pulled the info sheet), except at an auction there is no inspection or financing contingency to get out of the deal. You would have those things on a regular listing.
Conclusion: decide BEFORE you show up what your limit is going to be. Do NOT exceed it. Make sure you have room in case it costs more to fix than your estimate, that you make a profit, and that you account for holding costs, especially as you try to sell.