“SOLD! To the man in the white hat” . . . Buying Chico Area Homes at Auction

To say that the Real estate business is evolving is an understatement these days, as everyday is a new learning experience even for seasoned real estate veterans. An example of that evolution is the trend toward real estate auctions. Real estate auctions are actually a recycled phenomena, and a natural progression of the industry in light of the huge volume of bank owned properties. They are an effective tool for moving large a number of homes rapidly.

Lenders – owners of foreclosed upon homes, contract with an auction company to sell off a property. The auction company posts big signs all over the house letting prospective buyers know of the upcoming event. These days auction offerings are marketed at the auction company’s website with photos and some basic information. A long list of terms and conditions accompany the listing – read carefully and get a second reading by your realtor. Yes, Realtor…your realtor can assist you before, during and after the auction – the auction company will often offer a 1% fee to your agent if they accompany you to the auction and many buyers are offering to pay their agent an additional 1-2% to help them investigate the property, determine a good price and a bidding strategy. You’ll want to know that the title will be free of damaging liens and encumbrances, if the auction company doesn’t guarantee clean title be sure to have your local title company investigate ahead of time (there’s a fee for this service). You may also want to arrange to have a home inspector or contractor walk through the home to point out any potential construction or maintenance problems before you start bidding. The auction company will typically pool a bunch of properties in your area, perhaps as part of a larger event with properties in other nearby cities. The bigger auctions will allow both on-line real-time bidding along with live bidding at the auction.

A client of mine watched the process last weekend from the comfort of her Durham home (the auction was held in Sacramento). She and her husband were mildly interested in a couple of properties but mainly just wanted to learn the process. Here were some of the results for Chico area properties:

A property on Saurat in Chico, which had been recently offered for sale through a Chico real estate brokerage at $279,000, required a minimum bid of $99,000. The bidding went to $190,000 - $89,000 under what it had previously been listed for! The Chico area buyer was thrilled and offered to pay his agent that accompanied him 2% for assisting.

A remote 5 acre property with a clean but small home on Doe Mill Road in Forest Ranch had previously been on the market for $159,000. The minimum bid was $25,000. The property ended up fetching $120,000 at the auction - $39,000 under the last asking price.
The caveat to these sales is that they are ‘subject to bank approval of price and terms’, in other words, the bank can still void the sale if they don’t like the price….stay tuned for more on whether the buyers actually got their house at their price or not!