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We are assuming these 4 properties are foreclosures - bank owned but different banks (I did an online tax search). We are interested in 2 of them for rental houses (already have some experience as a LL). We haven't arranged for a walk-through (my husband can do basic inspections):
On the one house, vacant, the bids are $1 and $2 and increments of $1 minimum. The (tax roles) assessed value is $90K but it's been vacant. It's a couple miles down the street from us and is a corner "lot" of 3 acres. We've decided it isn't worth more than $15K to us because of the work needed plus it's in the country with well/septic.
The second house - we like more - is half the size but newer and has a tenant in it. This one is assessed at $60K but we definitely wouldn't go over $15K - and it already has two bids, $1 and $20 with $2 increments. This one is located in the near town in a good but new neighborhood and has all town services, water, gas, sewer.
Yes, we can afford to pay cash on either and then turn around and get a mortgage if we chose - we do not want all our cash tied up. We could actually buy both but only want one.
There is an option to increase the bid to a maximum automatically. I would assume everyone would do that but there's also an notice that if a bid comes in in the last 5 minutes, the auction is extended another 5 minutes.
My question is does anyone have experience with online only property auctions and what's your advice?
We are in the bidding on all 4 houses. We have looked at all but one and decided our max and the bidding has taken some interesting turns. It seems there is one other bidder on each house (different one) that is keeping up with us. We are not getting these houses for hundreds of dollars but it's very possible we'll see the prices hit the low thousands. Our max for one is $2K and the bids are still in the low hundreds. If nothing else, this is a learning experience for us.
If anyone has any suggestions or things we need to consider, please jump in here.
I see that no one else has replied yet, so I'll chime in. (At least that was the case when I started writing--while watching the news. I hope that you don't get tired of hearing from me.) I don't have extensive experience with online auctions--as I've only purchased one house that way--but I've bid on several properties in a few online auctions. The format you describe seems to be rather standard. The automatic bid feature is like eBay auctions and the 5-minute time extension is the same as in the online real estate auctions in which I've participated.
Provided that you can make sure to be available towards the end of the bidding period, my suggestion is that you simply not bid ahead of time. You'll never know what others have entered as their maximum amounts, but I see no point in pushing the bids up early. If you happen to exceed their maximum, that simply gives them time to enter another bid if they're so inclined. If they aren't online when the final bids approach, you may be able to sneak a bid in which isn't countered.
Usually, however, many others seem to do the same thing. Prices will often shoot up towards the end of the auction period. I've lost quite a few properties simply because the prices went up way past what I was willing to pay. As in all auctions, you just need to pick a maximum price and stick to it. It's far too easy to get caught up in auction fever.
I bought my condo through Hubzu. Bidding was in 1k increments. One mistake I made was going in with an eBay mentality of placing a maximum bid. When I won, at a low price, they ended up giving me a high counter offer, which I believe was based off my newbie anxious-to-win maximum bid. I declined, and the condo went back to auction. I bid again on the next round and won, avoiding the maximum bid option. This time, their counter offer was lower than the original one.
When I won, at a low price, they ended up giving me a high counter offer...
That's another thing. Do you know if there is a reserve price or if a high bid needs to be approved? The auctions I participated in were absolute auctions--the final high bid won. Each auction has specific instructions so make sure that you carefully read the terms and conditions of the auction.
That's another thing. Do you know if there is a reserve price or if a high bid needs to be approved? The auctions I participated in were absolute auctions--the final high bid won. Each auction has specific instructions so make sure that you carefully read the terms and conditions of the auction.
There was a reserve price for mine, but the counter offer when it went back to auction the second time, ended up being lower than the original. I don't have proof, but I wonder if they based their first counter offer off my maximum bid.
These are 2nd auctions and absolute. Yes, there is a promise of Warranty Deed and I am planning to hit county hall this week before end of the auction to search the properties.
I was out all day and earlier tonight. 3 of the 4 properties went up considerably but not to our max bid, so we are still high on all 4 and we haven't hit anywhere near the max we would pay.
Thanks for the input. It's nice to know we aren't the only ones who've ever done this.
Last edited by NY Annie; 07-21-2014 at 09:34 PM..
Reason: PS - thanks, Jack for helping me in so many areas
You might also be bidding against a 'dummy' bidder, one that is connected with the auction and is artificially driving up the price. This can and does happen. Just be careful.
You might also be bidding against a 'dummy' bidder, one that is connected with the auction and is artificially driving up the price. This can and does happen. Just be careful.
That's true, and I've read about ghost bidders, so was careful to be conscious of that when I bid. I only had one bidder against me. It was the same user name for both auctions. They just put in one starting bid though.
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I don't have extensive experience with online auctions--as I've only purchased one house that way--but I've bid on several properties in a few online auctions. The format you describe seems to be rather standard. The automatic bid feature is like eBay auctions and the 5-minute time extension is the same as in the online real estate auctions in which I've participated.
