Buying a Property at Auction, Is it For You?

While you were inline at Starbucks getting your Redeye, properties are being sold and money is changing hands.

Art Rossi couldn’t believe his eyes.

The 47-year-old Los Angeles resident was looking at Los Angeles County’s monthly home auction for the first time with dreams of someday making a great deal on a foreclosed home. He was shocked by the informal manner the proceedings were held.

One by one the auction criers shouted off lists of homes to be sold that day, you could barely hear over the city noise. Bidders rose their hands with handwritten bids on a sheet of paper, the regulars just yelled them out.

“It’s a surreal experience,” Rossi said. “With all the technology you would think it would be handled differently, but I guess you don’t fix what’s not broken.”

These auctions are attracting newbie’s, future homebuyers like Rossi who want to learn more about the process, it no longer exclusive to experienced real-estate investors. Properties sold at auctions in Los Angeles County have increased about 45 percent this year compared with 2006, according to The Reo Deal, a real-estate firm in Los Angeles specializing in foreclosures.

The number of REO foreclosed properties in Los Angeles county is much higher than the number that go to auction. About a fourth of them seldom make it to the auction house typically they are frozen up in bankruptcy court or sold as short sales, according to The Reo Deal.

Great Opportunities

The more houses are sold at auction, the more savvy investors have of filtering the selection, compared to a few years ago deals have improved as banks and mortgage companies are finally willing to take a loss to get rid of the properties.

On an average, new buyers of foreclosed homes have a savings of about 28.5 percent.

The only real challenge is that a prospective buyer can’t normally see the inside of the property before the auction, to this point the property was private property. That’s where buyers beware comes in as you could get stuck with something that needs allot of repairs. You as a Buyers must do your homework not only is there issue with repairs but there could be issues with liens.

You can still buy great properties at reduced prices but your best bet is to work with a real estate agent that is familiar with the process. Most auction house’s permit agent’s to represent you but must be registered with them prior to the actual auction. Make sure to read all pertinent information about the auction, premiums to be paid and how much do you have to have to bid, normally 10% cash.

Luis Pezzini
lpezzini@pezzini.info
http://www.SunsetStripRealty.com
Reo- Foreclosures Realtor

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