Real EstatE
How to Really WIN at a
When the auctioneer yells, “Sold!”
and points your way, make sure Real Estate Auction
you’ve just bought a bargain prop-
erty with a lot of profit potential,
rather than The Money Pit.
Most people have a preconceived
notion about how auctions work, and
often their point of reference is a movie
or TV show. After all, auctions have
served as comedic plot points on shows
from The Flintstones to The Simpsons,
and from The Dick Van Dyke Show
to Friends. As a result, virtually every
TV-watcher in America knows you
shouldn’t yawn, stretch, or make any
sudden movements during an auction
or you could become the unwitting
owner of a yacht, ugly piece of art,
or overpriced house that should “You need to know exactly what better. On the other hand, if the
probably be condemned. you’re buying,” says Tarver, “and if you’re number of bidders is too small — let’s
Auctions in real life work a little buying it at a big discount, be sure to say just five people — that’s not good
differently, but TV does have one aspect read the fine print of the contract.” either. “The auction company always
correct: Mess up, and you could be in For instance, there are generally two retains the right to cancel the event,
over your head. If you’re serious about types of auctions. At an absolute auction, even on an absolute auction,” Ballejos
getting a good deal, it helps to be prepared. the seller theoretically could sell you a says. “What you’re hoping for is an
If you’re in the market to buy a home at house for $1 or $20 million and beyond. average-sized RBC or less. Words
a real estate auction, ignorance can prove No limits, just whatever the market will to remember: If the count is down,
costly. When you decide to hit the next bear. And then there are reserve auctions, hang around; if it’s a mob, keep
real estate auction in your area, make sure where a minimum starting point — say, your job.”
you’re skilled enough to offer a successful $100,000 — is the absolute lowest the Even when you arrive at the auction,
bid and get your dream investment bidder could pay for the house. It’s there’s still research you can do. For
property for an attractive price. important to know which type of example, it’s always a smart move to ask
auction you’re attending. the staff for any housing details that are
Do your homework
Tony Ballejos is the managing partner still eluding you — before the auction
Unless you’re Bill or Melinda Gates,
at Sea2theD Real Estate Auctions in starts, says Oren Klein, an auctioneer at
you don’t want to show up at a real
Redondo Beach, Calif. “Once you
Tranzon, a national auctioneer company
estate auction and start raising your determine what the reserve amount is,
headquartered in New York. Sometimes,
paddle willy-nilly, bidding on whatever pull a property profile and verify the
there will be an open forum for bidders
house strikes your fancy. And frankly, payoff, as exact as possible,” he says. “If
to pose questions to the auctioneer.
the Gateses would probably do a little the payoff is 80 percent or less of what
But in the best-case scenario, you
research before they started bidding, too. you would pay, it’s looking good.” You
won’t have many questions. Klein says
Talk to Laurie Tarver, the senior vice can find a property profile online for
that the good auction houses — and
president of NRC Realty Advisors in about $19, says Ballejos. Or you could
there are bad ones out there — will offer
Chicago, and you quickly realize that offer to treat your friend who works in the
property information packages, which
buying a house at an auction is a lot real estate industry to a Starbucks’ coffee
have everything from the taxes in your
like buying a house through traditional — you might just get the profile for free.
area to a survey of the property, from
channels — at least to a point. Tarver says After you get the payoff information,
area information and demographics
many people hire their own inspectors to try to determine the registered bidder
to a home inspection report.
go through the house before the auction, count (RBC), says Ballejos. If there are
and at the very least you’ll want to comb going to be a fairly small number of Think about your approach
through the paperwork. people bidding, you know your odds are Earlier this year, The Today Show
34 I July 08 I Growing Wealth I growingwealthmag.com
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