Real Estate and Beyond Blog

Phoenix, AZ, will be hosting another live real estate auction at the beginning of August. There will be over 200 homes being auctioned. I am very well versed when it comes to representing people at auctions. The Real Estate and Beyond Network is in motion. The Lending Company and another private money resource will be supplying the financing for their venue. Please read below on how to make money at auctions.

Exploring Real Estate Auctions

There are times when the traditional way of selling real estate is too slow. Life goes on for people who are facing divorce, unemployment, health issues, and other challenges. One must sell their property in a rapid amount of time. One will see that the vultures come out offering pennies on the dollar for a troubled homeowner. One solution is selling the property at auction. It is proven that auctions do work for sellers. It is quick, efficient and one has the possibility of obtaining the highest price possible. 

Real estate auction companies do a great job on promoting the one to four day event in print, television, Internet and other lines of advertising in order to attract the highest amount of qualified buyers to bid on the properties. These are all cash deals with no contingencies and assurances from the seller. The home is sold AS-IS.   

It has been my research that Real Estate Auctions are the fastest growing trend in real estate industry.  Auctions are becoming the first choice for sellers of all types of real estate since everyone wants the cash in the most expedient manner. Would you believe that over 60 billion dollars worth of real estate is sold at auction in the United States on annual basis? The National Association of realtors has predicted that by the year 2010 that 30% of all real estate transactions will be conducted through auctions.

 Auctions vs. Traditional listings

 

AUCTION	REALTOR LISTING
Fast. Homes sell in 30 days or less	Home stays on market until it closes and funds that could take months.
Buyer can offer anything on the home either lower or higher	Buyer's offer depends on number of days on market and asking price
Property is sold AS-IS with no contingencies. Sorry! No Refunds!	Buyers ask seller to make repairs or lower price from asking price. Many times it may fall through escrow. That means buyer has to start with a new buyer. This can be a very long process if home needs repairs.
Takes the guess work on final price. Sold to the highest bidder.	Seller must price house to sell within first 45 days or forced to reduce price to move property.
Many avenues of advertising to bring buyers to the auction.	Limited forms of advertising to bring buyers to the table.
Buyers go into a contract to purchase house so they must perform or face the risk of losing deposit. It creates a sense of urgency on the buyer's side.	Low motivation from the buyer's side because of many choices on the market. Seller has to wait for the buyer to come to them.
Terms set by seller before auction.	Seller must cater to the buyer many times to have a successful sale of the property. g

 

 Three Types of Auctions:

1.      Absolute Auction: There is no minimum bid required. The real estate is sold to the highest bidder.

2.      Minimum Bid Auction: Seller sets minimum bid for the real estate. If the minimum bid is not met, then the seller is not obligated to sell. Seller and highest bidder can meet in private to work things out if possible. Auction still gets paid for that service.

3.      Reserve Auction: Allows seller to reserve the right to accept or reject the highest bid within a 72-hour spam of time. Seller is not obligated to sell to the highest bidder. Seller may not have set price in mind.

Benefits for the Seller to sell property at an Auction:

• Get the highest amount for the property since buyers compete against one another. People do not like to lose so they end up over bidding. Emotions take over the common sense side of the business. The auction creates excitement at the same time. 
• The auction is fast and delivers immediate results properties close within 30 days. It provides quick losings for the seller. Auctions have the marketing down to the science to bring large crowed.
• he starting price is low leaving it to the auctioneer to start driving up the price as people bid against each other. The auction sells properties for much more than was expected by the seller.
• The carrying cost of the property is decreased compared to traditional listing since the property is sold 30 days after auction. These costs included the following: taxes, utilities, insurance, landscaping, etc.
• Property is being sold AS-IS. This is a huge advantage to the seller. Seller and buyer waive all contingencies on the property.
• Seller is able to accept their bottom price at auction. The minimum bid is set before the auction date.
• Seller is always in control of his/her property. This eliminates negotiations between seller and buyer in a traditional real estate method. This method takes time and money.
• An Auction company will walk a seller from A to Z through the entire process including at closing.

Benefits for Buyers to Purchase at Auction:

• Buyer is setting own market Market Value on property at purchase. Buyer is not relying on realtor or appraiser to set the price. 
• Avoids long negotiations between Seller and Buyer. One can have it NOW. Most auctions last less than two hours depending on number of properties that day. 
• Auctions set a level playing field for every buyer. The highest bidder wins. 
• Auctions allow ample time for buyers to review property and do any research on the property so one is prepared at auction. One should only bid to their maximum. A bidder must avoid getting caught up in the moment. Common sense must prevail at Auction and not one's emotions.    

How does one prepare for an Auction as a buyer?

Buyers must come prepared to the auction knowing what one is willing to pay for a piece of real estate. One must take emotions out of the equation. One must do their homework to be fully educated and prepared to roll out a decision at auction.

Here are my personal recommendations when preparing for auction:

• Hire a realtor who specializes in real estate investments.
• Request Bidder's Package from auction or visit web site. The package will include the following such as rules of engagement at auction, any inspection reports, title, zoning concerns, and required deposits, any available financing and closing expectations.
• Realtor will conduct a true comparative marketing analysis on each property that a buyer will bid on. This avoids the buyer over bidding on a property.
• Physically inspect the property to tally up repairs needed to the property along with any other facts on the property. These costs must be considered when bidding on a property.
• Attend a few auctions to become comfortable with the process. Observe other people's actions. The Real Estate and Beyond Network is here to assist you in this process.

Conclusion

The real estate auction method of buying and selling real estate is growing at a rapid rate as demonstrated in this article. A buyer must not be overtaken by speed and emotion present at auction. Hiring a Realtor is there to provide a truly business transaction and save one from acting on emotions. Real estate bargains do not come easy at the auction. One must do the homework and be prepared at auction to snap up the bargain.

Please review the advantages listed above for both sellers and buyers at real estate auctions. The seller has the overall advantage at auction if one is not prepared. They are hired by the seller to obtain the highest price for the real estate being offered at the auction. The auction company gets paid when the property closes. So, they have the seller's best interest in mind.

The Real Estate and Beyond Network is fully prepared to represent bidders at auction. The entire Network is on the bidders side. Please listen to the weekly Real Estate and Beyond Radio Show each Saturday on KKNT 960AM from 12-2PM Phoenix time. Host Harry D'Elia discusses how to truly invest in real estate. Please visit the team web site at www.deliateam.com.

About the author: Harry F. D'Elia III is the Founder and CEO of Real Estate and Beyond. Host of the popular Real Estate and Beyond radio show hosted each Saturday from 12-2PM Phoenix time on KKNT 960 AM. Harry continues to assist people in building their wholesale residential portfolio one home at a time. Please visit www.DeliaTeam.com for further detail or call at 480-303-1800. Make the Call, Set the Plan and Do the Deal$.