It isn't the first time I have heard about auctions but they really have become popular this year. I don't know if you have seen the ads or heard the buzz on the street but at the auctions you can get great deals on homes.
What if I told you that there is a reason why auctions have become so popular and it's not because banks are just liquidating homes with no regard for profit or loss. Auctions are the latest and greatest way to market and sell homes for the most money possible.
Here is how the system works... Most of the homes advertised for public auctions are homes that are currently listing with agents on the MLS. Agents are given a listing contract for a bank foreclosure with a specific time limit. During that time the agent markets the home and presents offers to the bank. If the agent sells the home that the story ends there. If the home does not sell in the time period allowed than the agent looses the listing and it goes to the auction.
Most auctions list a very low price for the homes. This is done to create the hype that is needed to draw in customers looking for a great deal. In actuality there is a reserve price that the bank puts on the home so that they don't lose more than they want to. It is interesting to note that the reserve price is usually the same price they would have taken a month earlier when the home was listed. (but I get ahead of myself) Think EBay and apply it to homes.
The auction is in all the papers and signs are posted for open houses to check out the home before you bid. Many people go through those homes during these preview weekend and they result in offers. Here is the good part.... The home is usually sold for more money than they could have bought it for from the listing agent just a short time earlier. After talking to one of these listing agents yesterday we both shook our heads at the EBay auction system that is selling these homes for prices we cannot seem to get from a regular listing. She told me about a home that was under contract for one price and it fell through due to a financing issue with the buyer. This home went to auction where it sold for 9K more than the buyer had it under contract for just a month earlier. The power of the auction is amazing.
I have been on coaching calls with people selling systems to implement an auction on a listing that just isn't selling. There seems to be big money in these systems and with the news telling us that real estate prices are falling (which they are not overall in North Texas) many buyers believe they are getting great deals on these "distressed" properties.
There are great deals to be had on homes in the Collin County area! Listed homes and even auction homes can be great investment property. I encourage you not to fall for the hype and do your research when buying a new home. Remember what everyone's parents told them. "If it looks too good to be true, it probably is".
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