Coaching Businesses and Life

Since buyers are regaining leverage, sellers are facing a new reality and real-estate auctions are sprouting like wild mushrooms alluring many to would-be great deals.  However, once any fad has a name and is covered in the media, it is often too late.  This is forcing sellers to try to sell quickly avoiding eventual declining values mount.

If you love bargaining and auction sales, this can be a lot of fun, however you must be very, very prepared.  Many people are already playing the game and you must arm yourself with professionals who know the tune of the music.  Strangely enough, the trend has taken longer in the West, where auctions are the last-hope recourse.  In the minds of many, auctions are only for distressed bad houses.

There are two popular types of auctions; ”open outcry,” where auctioneers calls out bids, and sealed-bid auctions, where bidders submit offers without knowing other’s bids.  I’ve watched collector’s car auctions and it is fascinating.  Of course, that is a different market where connoisseurs know the car, history and normal fetching price.  A house is a different story. 
In either case, buyers should have a firm ceiling price in mind, if not they could get carried away and eventually face financial penalties.  Buyers often get caught up in ”auction fever” and overspend.  They don not realize they pay most of the commission fees, typically 7 percent to 10 percent of the sale price. It is important to understand that listing brokers normally get 2 percent to 2.5 percent and the auction companies get 8 percent. Sellers usually pay some of the marketing and advertising fees.

Of course, not everyone is convinced auctions are a good way to sell a home.   A home listed for $2 million, bought a few years ago for $800,000, renovated with $500,000 could fetch far less. 

Foreclosure auctions are another beast where the lender makes the first bid. If they get no bids, they keep the property and sell it. Here is the trick, to win a foreclosure, buyers must pay in full cash or a cashier’s check at the close of the auction. These sales are very complicated and some experts say making a bargain is tricky. The obvious problems are that properties can require extensive work and have liens against them.

Again, auctions are becoming very popular due to mass media coverage and different sectors have used these systems for long. I have watched exciting collector car auctions go up to amazing amounts.  Take the muscle car craze as of late.  Muscle cars that were worth $20,000 to 30,000 are now fetching 50,000 to even over one million dollar for a Hemi Baracuda sold a few months ago!  Foreclosures are much more tricky and one should not go into it lightly.  You need an agent who really knows how to handle a foreclosure, a good lawyer to look at the transactions papers and have a good title company.