Last weekend I took my daughter up to Clinton Illinois to a public car auction.  Some of the cars were ones that were owned by the Illinois State Police that they had obtained by seizing them.  Others had been repossessed.  While others were there on consignment. 

My daughter, who just graduated from college (Ohio State) didn't have a lot of money to spend and to her credit didn't want to go into debt to get this car.  She had toured the local car lots and had even gone to look at several that were being offered for sale by their owners.  Of the ones that she would consider owning, none of them were within her budget.

That's when I suggested that we go to the car auction to see what we could find.  Before we went, I made sure that she knew the good, the bad and the ugly about buying a car this way.  That is that you really don't know too much about the history of the vehicle and that the sale was going to be "as is/where is" with no warranties what so ever.

I went on to explain to her that she had to take this into account when she bid on a car.  She understood, so on Saturday morning, we loaded up the car and drove to Clinton.

When we got there, we toured the lot looking for the cars that we had seen on the internet that were of interest to her.  We started the cars, drove them around the lot, checked their oil and transmission fluids and generally gave the cars a good looking over.  We then went into the sale barn and waited for the ones that she was interested to make their way through the line.

We watched as the cars were driven or pushed through and I was amazed at how some of the cars were being bid up past even their retail value.  Others were going for ridiculously low prices.

The first car that she was interested in came up and two people got into a bidding war over it and Whitney dropped out.  She was disappointed, but she knew that she had to be disciplined.

Another car came up that was newer and looked great, but the auctioneer said that it had transmission problems, so she passed on it.

Then the one that her and her boyfriend wanted the most came up.  I told Whit to hang back for a bit in order to see how things went.

The Auctioneer started the bidding at $5000.00 (almost the retail value of the vehicle), then went down.  Finally, the bidding started in earnest at $500.00.  It went up to $800.00 before their was a pause in the bidding.  Whitney jumped in and bid $850.00.  Another bidder (who I recognized as a car dealer) ran with her.

Again, the Auctioneer tried to get everyone excited and to run the bids up quickly...I whispered in her ear to back off....which was a good thing because the auctioneer was pulling some of these bids out of his axx.  He backed down when nobody ran with him to the last true bid of $1,250.00 (from the pro).

Going once...

Going twice....

Whitney looked at me fearfully and I gave her the nod.  She bid $1,300 and won the auction!  YEAH!!!!

When we got home, I checked the value on the computer and in "fair" condition (which this car was technically in) the value was $4,300 or so.  After we fix a few things, the value of the car should be about $6,000.00 or so (she's going to need to put about $1,000.00 into the car to get it there).  To say the least, I was excited for her!

Then today I read a post by a lady named, Beth Anderson called, "Got A Great Car For You".  Her post talked about how too many people were focused on just getting a bargain when buying a foreclosed home and discounting the positive attributes of a "normal" listing. 

She makes some excellent points and I encourage you to read her post because not all home buyers are going to be willing to take the risk that my daughter did in buying her car at an auction!

For Whitney (who had me - who has done this sort of thing a few times in the past, as well as a mechanic who works on the cheap in her family) the risk was worth it.  This might not be the case for your buyer.

If a bargain is what your client is looking for, then by all means show them the properties in your area that have been foreclosed upon.  For the right person, they can be a true bargain.  However, please make sure that they know the down side of buying this type of property too.  If you buy a foreclosure, you have to go into the transaction with your eyes open!

R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc.

Bob Mitchell is president of ValueList Real Estate Services,  St. Louis' largest discount/full-service real estate and mortgage company.  If you would like to find out more about Bob, ValueList or our flat-fee listing program, please feel free to visit our web site at valuelistre.com