Real Estate auctions. Read the fine print?
Wednesday, March 25, 2009
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I have had many clients inquire about the Home auctions that are held every few months with the foreclosures. I have never been to one, as most of my clients are out of town, and you must be there in person.
I did however read up on the auctions, and dealing with buyers, have a few concerns.
Just for any reader's information, when I represent a buyer at one of the auctions (and we are both there) I am paid a commission, so this isn't a complaint about the auctions instead of using me as a representative.
I read some of the fine print, and this is what stood out the most:
1. No inspection period after the auction. (They insist that you have it inspected before the auction) A very comprehensive inspection takes 2-3 hours and costs $250-300. Can someone afford to (and have time) for a comprehensive inspection for 3 or 4 homes?
2. Here's the big one. Each house has a reserve price (This is the non advertised minimum price for the house to be sold) If a home has a starting bid of $5000, the "reserve price" may be $50,000 and even bidding up to $45,000 will leave the home unsold, as the reserve price wasn't reached.
Here is the kicker! I will paraphrase, so I don't get in any trouble!
Fine print... " The Auctioneer may begin the bids on behalf of the seller, and may make further bids on behalf of the seller by placing successive or consecutive bids, and also may place bids in response to other bidders up to the reserve price."
I guess my question is.. Those auctions have many people there, spectators and buyers. A prospective buyer won't have line of sight of everyone. It would be pretty scary to think you were bidding against a person, but to find out you were actually bidding against the "house" (auctioneer) Posted by Brian on 09:34 PM • (1) Comments • (0) Trackbacks • Permalink • Email This Post
