Yesterday one of the largest auctions in the Washington DC metropolitan area started. Four ,yes, 4 days of auctioning off over 575 houses in Maryland, Virginia and the District of Columbia. There has been radio coverage , constant e-mails , print ads and more.

All of the houses have had "Open Houses" for the previous three weekends to stir up a little excitement and create a"buzz" within our industry. Every Realtor had to register themselves by following very specific guidelines and after that a request came to register all the "Buyers" you were bringing with you to the Auction. This made it appear to be very controlled and efficiently run due to its size.

I coordinated the day with my clients earlier this week , six had decided to go and purchase property. A couple to-learn the process for the next auction , as a high majority of the houses were in Virginia and they only wanted Maryland. I arrived downtown at 7:45 AM parked , started calling my clients for a meet point. I was amazed to see "TOUR BUSES" pulling in with people and dropping them off in front of the convention center. I found most of my clients and we went to registration , first order of business was to give them the $5,000.00 Certified check before they would give you a number paddle to bid. That was a first for me , but without that you could not get in and sit in the bidder seating area. Farther in the back they had a Non-bidder viewing area. We find seat and settle in by 8:45 AM.

The auctioneer warms up the crowd , asks how many folks have never been to an "Auction" , over 3/4's of the room raised their hands. I personally saw very few agents in the crowd , if they were there they did not identify themselves as Realtors.  I knew it was going to be a long day , with in experienced bidders without counsel alot of properties would not sell.

The Auction started , if you were the successful bidder they took you away to the Contract room and "Countrywide" was on hand to review your finances. Pre-Approval letter or not , they ran your credit to ensure your lender letter was valid. Many homes were cash only , if you had to provide "proof of funds to close on site.

Needless to say by 11:30 AM , we had not even gotten to house #29 on the program , several houses that had been "SOLD" (subject too) earlier in the morning, came right back up on the screen for re-bidding. Only six houses had actually SOLD , and my clients and I decided we had plenty of time to eat lunch. 

I had one successful bidder , I had done my research and told her when to stop bidding, based on what was owed on the property,condition and adding in the buyers premium .We were escorted to the contracts by our assigned runner. I had brought a Pre- Approval letter by "Countrywide" with me to get us thru quicker and it did. Here is when the deal breaker came into play.We both new that a 5% buyer premium was attached to the price , then add the 1% agent commission to the price, then it got crazy. The buyer had to pay all the Tax stamps , OK I prepared her for that , but the junk fees that came afterwards was ridiculous. Attorneys fees were 3x the normal , surveys had doubled , not to mention the rate of the title insurance , adding over 10% to the bid price. Needless to say #176 went back up on the screen and bidding resumed again , for the next attempt at a successful sale.

All in all it was a learning experience , only about 50 properties had SOLD when we left and there are 3 more days to go. The basic lesson I learned is that the average consumer is not ready for these auctions. They want to steal a house or they do not have an agent to conduct valuable research for them and bid way over price.

But the bottom line is , 80% of the houses did not sell , they will have to go back into the cycle of our inventory for the "Spring" market. Many 'Buyers' will waste their time trying to get a "Deal" that is not out there. At what point will the Mortgage and Servicing companies realize that they can not get the FULL amount they have into these units. They all need to unify and come up with a solution that is vuiable for all within the industry and keep the American Dream alive