This Thursday I will be attending an old fashioned house auction where investors meet at a local convention hall and an auctioneer stands on stage rattling off numbers. Most of the these houses are junky looking and with tons of deferred maintenance. 10 years ago, I could have bought these same houses from the owners at between $5K - $10K. I am going to this auction to find out what investors will pay now for these junky fixer-upper houses. Here with each winning bid, the investor must put down $5,000 plus 10% buyers premium on the day of auction. The balance must be settled within 30 days.

Has anyone else here attended a similar auction? Did you buy anything at that auction? Also, were you allowed to inspect the inside of the house prior to the auction?

We have purchased the majority of our properties at auction; most at foreclosure auctions.

They are currently going for 5-10 times what they were when we started!

NE,

Gevans,

If the investments groups are there bidding up prices, I will probably leave. I am not going get in bidding war with someone who has more money than brains.

There are probably 20 houses slated to be auctioned on Thursday. Two of them are on the same block where I have houses currently rented. I will be keeping an eye on those and may bid if the bidding does not get insane.

All my auctions have either been tax foreclosures on the courthouse steps (successful), online (mostly unsuccessful), or onsite.

The onsite ones are the ones to watch out for, because they'll make up fake phone bids to prevent the house from selling, if it's advertised as no-reserve but they don't want to actually run a no-reserve auction.

For the tax foreclosures, you peek in the windows and chat with the neighbors.

My question for you is--- where do they get their stock of houses for sale? Who gets the money from the sales?

If it's a tax foreclosure, it's done a certain way. If it's a bank foreclosure, it's done a certain way. If it's an individual or someone's heirs, they're also more likely to do it a certain way.

I am going to give you all the house addresses and MLS # for the two houses I have my eye on. Since they are listed on the MLS as auction houses, I would assume they are bank foreclosures.

313 Elmwood Ave. Gadsden, AL 35903 MLS: 21853931

1330 Paden Drive, Gadsden, AL 35903 MLS: 21851899

Buying at auction in NC is frustrating as there is no end, we discovered. Anyone can place an upset bid within ten days of the last one as long as they bid up X percent (3? 10? I forget.) We bought one place that way.

We'd been inside and it was a total 1970's museum, immaculate. Neighbor, who was a member of the family, let us in. It was an estate sale and the siblings (in their 70's!) were fighting over it - judge ordered it sold at auction.

On courthouse steps, only one bid was placed, the opening bid. We waited 10 days and placed an upset bid. Winner was po'ed, we heard, and placed another bid. We didn't wait this time, went ahead and placed another upset bid.

Ken,

Since I know the neighborhoods here well, I can answer your questions.

313 Elmwood Ave is a typical slumlord house where the owner milked it for every last drop of milk it could produce. If you spent $25K on it, that would produce a resell value would be around $50,000 due to the crummy D adjacent hood. House would rent for $650/month.

1330 Paden Drive is in a C hood and since it is a 3/2 with a garage, the numbers here are different. Re-sell value would be around $100K and rent would be around $1,000/month.

Elmwood - I would drive by and check out the neighborhood. Is it a neglected house on a block that's otherwise good, or is it representative of the neighborhood?

I like the metal roof. Electric panel looks newish from what I can see. That's good. I'm concerned about the stovepipe. Is that normal for heating your houses in your area? It says it's a 1400 sf 3/1, no HVAC. Since I can only see one side of the house, I can't guess at the kitchen/bath layout. Since I'm not seeing vent pipes over that back addition, I guess that's an eat-in kitchen, with the cooking part facing the other direction? It's also hard to tell which side the living room is on, vs what side the front bedroom is on, and how far back those go, because I don't know the meaning of the ventpipe. Here, I see those in living rooms, but unless your living room stretches along the entire length of the left-side of the house, it doesn't make sense.

It would be worth peeping in the windows. I have one that's similar-- it was built in 1940 but is only 1100 sf. With that one, the only bathroom is a jack-and-jill bath between two bedrooms, so in order to use the only bathroom, you need to cross through someone's bedroom. Because it has two doors, plus the linen cupboard, plus the hot water heater closet-- it's a very cramped bathroom, with bad layout. It also has washer/dryer hookups in the kitchen. So, when you look around, keep an eye open for plumbing/venting clues. I'd also be cautious about water damage from a leaky roof--- because someone was so diligent to spring for an awesome roof for a sad house. They needed to have some kind of motivation to do that.

If I was comfortable with what I saw through the windows, I'd probably pay $5-$12k on that, and expect another $40-$50k in renovation costs. More, if labor is more expensive in your town. Around here, it would rent for about $900/month, but probably more if you could find the right person.

Saturday I was at a place- looked like an estate. The beat up doublewide on three acres required new flooring through out due to its leaky roof. You get the idea of the building condition and quality?

It was located however near one of the more desirable areas in the county - although this place is out in the sticks. It went for $71,000.

Deanna,

The house at 313 Elmwood is more representative of the dirt poor neighborhood. I may pay $5,000 for the house but that would be my max.

I've bought quite a number from auctions. If I can get in that helps me know the conditions. Pier and beam is easy to stick your head in the crawl space and see if it's newer copper, pex, or old iron water pipe and you can get a feel for any bizarre electrical or plumbing mods that are going to have to be fixed. Get a quick look at the water heater, furnace, and breaker box. Peek in the attic for knob and tube wiring. If I can't get in then I peek through the windows and assume that all the mechanical systems are going to have to be replaced and bid accordingly. I quit going to them the last 2-3 years because bidding has been crazy and just recently started going back. It's calmed down a little more recently but still over my max price. I'm not really wanting to acquire more but I guess I'm an addict that still needs his fix.

MikeA,

Roy,

I purchased many homes at various types of auctions.

Locally the tax and foreclosure auctions are now online so we cannot eyeball the competition

AND easily sniped at the last second.

Tip: bid on the PARCEL ID NUMBER, not the street address. I accidentally bought a drainage ditch BEHIND the beautiful house. $6000 fine to back out. I was not the only bidder who mistook the offering.

Tip: don't tug on your earlobe during the bidding!

BRAD

Ken,

More important though, you have to know your local housing market well enough to know what a bargain actually looks like.

Yesterday, the slumlord house would have been a bargain at between $5-$10K. The bidding started $10K and within 2 minutes, the final bid was $22K.

The 3/2/2 house which I was tempted to bid on, would have been a bargain at $30K. The opening bid was $25K and within 2 minutes, the final bid was $60K.