Posted by David Krulac on June 18, 2002 at 10:37:48:
but as you experienced this is not necessarily a good buying technique, when potential buyers are driving the price up to market or beyond. But keep it in mind for when YOU are selling.
David Krulac
Central Pennsylvania
House up for Auction - Posted by Jon (IL)
Posted by Jon (IL) on June 15, 2002 at 23:52:26:
I toured a house today that is being sold via auction on Sunday evening (6/16). The owners are selling the house via the method describe in “How to Sell Your Home in 5 Days” by Bill Effros (www.5-day.com).
Naturally I was interested and would consider purchasing it to live in even if the deal was just good and not great (I am renting right now). There are no brokers involved.
Unfortunately, the time scale does not provide much time to allow me to do ‘due diligence’ prior to the start of the bidding process. I reviewed a house inspection that they had had performed including microbial (to the water) and radon. I looked throughout the house and there was nothing obviously wrong. Is there anything that I should look for / ask regarding the inspection to make me feel comfortable with it, or would it just be best that I have someone inspect it? A title search would also need to be done.
Specifics from the handout:
“Conditioned upon the owner’s acceptance, we will offer the home to the highest and best bidder at his or her highest bid price.”
“For your protection: your bid is not a legally binding contract and as such may be withdrawn at any time up to an accepted contract.”
“A meeting will be held at 1:30 pm on Monday, June 17th at the law firm of … with the highest/best bidder. The purpose of the meeting will be to execute the purchase agreement and accept a $5000 ernest money deposit, which will be held in the escrow account of the same firm. The purchase agreement will be in the form of a real estate sales contract currently used in … County, … Terms of the contract shall supersede any terms to the contrary contained herein.”
“Bidders must initiate financing on this home, if applicable, within 24 hours of contract. Proof of the bidder’s ability to pay the purchase price, and/or qualify for financing, must be in the form of a written letter of qualification/approval from a financial institution within 10 days of contract acceptance. Purchaser should plan on conducting the closing on Monday, July 29th, 2002.”
“All closing costs are at the buyer’s expense unless otherwise specified. Seller is responsible only for payment of survey, normal title fees, and state and county transfer taxes.”
My thoughts on this are as follows -
Based on the provided verbiage, there isn’t any risk to bidding on the property.
As of Monday at 1:30, if I am the winning bidder, I will have to risk $5k if I want to keep my ability to purchase the property. It looks like I will definately need positive results from a title search by this time, but a home inspection would be good as well.
Does anyone have any thoughts/advice regarding bidding, my thoughts, or the path to take in the event that I have the winning bid? Any big uh-oh’s, or lookout’s? Anyone purchase or sell a house this way?
I haven’t registered to bid yet. I have never purchased or owned real estate before.
Thanks much!
-Jon.
Re: House up for Auction - Posted by Mike Daly (Atlanta)
Posted by Mike Daly (Atlanta) on June 16, 2002 at 19:02:13:
Like you mentioned, you’re not legally obligated to buy until you sign a contract, so you have nothing to lose by bidding. If you do win, just make sure the contract has inspection and title contingencies – these are pretty standard. Otherwise you can just back out.
Re: House up for Auction - Posted by Jon (IL)
Posted by Jon (IL) on June 16, 2002 at 22:35:49:
Thx for the response. I bid on the property a number of times, but the bidding went over my limit. The last bid I heard was 94% of FMV based upon my estimation. (The book suggests a 75% FMV initial bid) It looks like this selling method has merits.
-Jon.
Re: House up for Auction - Posted by David Krulac
Posted by David Krulac on June 17, 2002 at 19:29:47:
and at 94% of FMV without the commission, its like 100% of FMV or more. Effros book is a great book, check the archives here for more on Effros method.
David Krulac
Central Pennsylvania
Re: House up for Auction - Posted by Jon (IL)
Posted by Jon (IL) on June 17, 2002 at 20:26:55:
The bidding probably went a fair bit higher, even. The first and second runners-up were to get notified (immediately) of their position in the event that the winner failed to make the initial deposit. I didn’t hear anything and must have come in 4th or 5th. I know that there was a maximum of 4 other bidders due to one of the bid increments that I witnessed.
-Jon.