Considering an Auction?
Buyer Beware (Very)
I have had more clients ask about — and have noticed myself — that more distressed property is now being sold through auctions locally (see my post discussing wwww.AuctionToday.com). I don’t handle those — such auctions typically are an alternative to selling through Realtors.
However, I feel I’d be remiss not to raise a few (ok, a lot of) threshold questions that any prospective Bidder should ask. Such as:
–What kind of title will you be getting if your bid is accepted?
–What fees will you be charged? Auction Today discloses, in fine print, that they tack on a 5% fee to all winning offers.
–Who are you bidding against? (beware of “straw buyers” bidding remotely to drive up the price).
–Are there “minimum’s” or reserve prices?
–What kind of payment is accepted — and how long do you have to deliver it?
–What are the “comp’s” (comparable sold properties) for the property you’re interested in buying?
–What is the condition of the property you’re bidding on?
–What liens, fines, taxes or other fees are owed against it?
–What legal recourse (if any) will you have if there are major problems after you close?
–If you’re buying a townhouse or condo at auction, what are the association fees? Complexes with large numbers of foreclosures are being forced to raise fees on solvent owners to compensate for shortfalls associated with non-paying foreclosures.
When I handle a transaction for a client, I can answer each and every one of these questions. Plus, my client will have been able to tour the property multiple times, then bring in a professional inspector.
You should insist on the same access and disclosures if you’re buying at auction.