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SALT LAKE CITY -- Seventeen Utah properties are going on the auction block Monday -- all of them foreclosures. Buying an auctioned property is a process that can be intimidating to the uninitiated.
REDC group and auction.com spokesman Rick Weinberg says the most important bit of advice he can impart to the first-timer is to spend some time just observing.
"Really sit back and soak in the atmosphere for the first two properties, so you see what's going on and then jump into the action," he advises.
The reason is to avoid getting caught up in a bidding war, or what he calls a bidding frenzy.
"Make sure that you determine the highest price that you can go, that you can bid on the property and don't go higher than that," he said. "Don't get caught up in the bidding frenzy."
He says you should be able to do some homework before the auction to figure out what you think a property is worth as well. For example, the 17 properties listed at auction.com had open houses in the weeks leading up to the auction. And even if you missed out on that, the addresses and details about each home are listed on the website, so at the very least you could drive by or even talk to neighbors.
It's one thing he says can separate legitimate foreclosure auction sites from the online scams.
"If they don't say where the property is and give you the address, then it's certainly not even worth doing business with them," he said.
Not every auction company permits open houses or inspection of the homes for auction, so it's worth doing homework on the company behind the auction as well. This can be important because, often, a foreclosed home may not be in the best condition, and you are buying it as-is, part of the reason for the lower price.
You don't have to have your financing sorted out before the auction begins, but Weinberg says it doesn't hurt.
"Boom, you just walk in, you get the property that you want and the financing is all set," he says.
Buyers are also advised if they're serious, they should go with a $2,500 cashier's check to the auction to use as down payment on a winning bid.
Also, be aware auctions often attract professional home flippers with deep pockets, making a bidding war Weinberg cautions against even more likely.
Beyond that, Weinberg describes the process as a win-win for the economy. Banks, which are losing money on a property while it sits empty because they are not receiving monthly mortgage payments or property taxes, stop hemorrhaging when a bidder takes over a foreclosure property. The bidder gets a bargain. And often, because the bidder will hire landscapers or other crews to help fix up the property, it can create short-term jobs.
The properties up for bid Monday night in Salt Lake City can be previewed online, here. The starting bids range from $1,000 to $149,000 for properties valued up to $550,000 all over the Beehive State.
You do need to register in advance, either in person before 5 p.m. Monday at the downtown Salt Lake City Marriott, or online here.
A few more tips for the prospective bidder:
- The price you bid is NOT the final price. Add a 5 percent "buyer premium" for the auction house's costs.
- Once you've won a bid, you can't change your mind, so make sure it's what you want and you're willing to accept the risks.
- Financing is available for some, but not all, properties in the auction. Make sure you're not bidding on a ‘cash-only' home (unless, of course, you've got the cash.)
- You are allowed to have a real estate agent or broker with you at the auction, but they must also register.
- If you win, be prepared to put up an earnest money deposit of 5 percent. That cashier's check can go toward this amount.
- Again, different auction houses operate differently, so be sure to do your homework.
E-mail: bbruce@ksl.com
