| Auctions are busy work through looking at thousands | | | | buyer's premium. We agreed to this deal and savings. |
| of listings on the internet, driving to hundreds and | | | | Bottom line: We saved $6750 off of the original |
| hundreds of homes, checking comps on the MLS | | | | auction price and $9250 off of the first counter offer |
| (multiple listing service), and getting to know | | | | that the bank came back with. |
| neighborhoods and trends. Many people who were | | | | Lesson Learned: Do not be attached to the home! If |
| bidding at auctions this year were buying almost retail | | | | the bank counters, you are free to walk away without |
| pricing. They thought it was a deal since it was a | | | | being obligated to purchase the home and auction co. |
| discount from the previous 2 years, but it was the | | | | must refund your deposit. If the bank counters, |
| same price or higher than homes that are listed on the | | | | celebrate because you are able to get a better |
| MLS. Here is a great story and lessons learned from | | | | discount from the bank. The numbers weren't that high, |
| the latest Auction Deal we acquired: JIm (my adorable | | | | but it was a low priced home and we saved almost |
| hubby) went to an auction and bid on a home in | | | | around 6% of our original winning bid. |
| Orange, CA. He won the bid $115K for house plus 5% | | | | - Always negotiate - If the banks try to nickel and dime |
| buyer's premium. Total price - $120,750 Bank came | | | | you for a few thousand dollars, come back and |
| back and said they wanted $2500 more for the price. | | | | counter lower. Don't believe auction co. The buyer's |
| The $2500 more for the price did not include the | | | | premium is NOT set in stone and is negotiable. In our |
| increase of $125 of buyer's premium. The auction co. | | | | case, the auction co. negotiated higher for their |
| told Jim that the bank really wanted $5000 increase | | | | premium over giving the bank that extra $1000. |
| but the auction co. was splitting this increase with Jim | | | | - Know your Numbers - When going to the auction, |
| (how nice of them). We asked the auction co. to fax | | | | know your numbers. Do not overbid for a property |
| us the counter offer. The counter offer stated just our | | | | unless you have an exit strategy. We actually broke |
| increase as well as a small increase in the buyer's | | | | our rules on this home because it was in Orange |
| premium. I told Jim NOT to accept the counter offer | | | | County and we knew that it was a cash flow |
| and give them a counter offer for $110K and $3K | | | | property in case we could not wholetail (cross |
| buyer's premium (2.7%). (Everything is negotiable | | | | between wholesale and retail) or fix and flip this home. |
| onced you receive that initial counter offer). We were | | | | - In Writing Please - Last lesson is always having |
| not attached to the home and if we would have lost | | | | everything in writing when banks come up with their |
| the home over $2500, then that was fine with us. | | | | counter offer. By making the bank or auction co. write |
| The bank came bank and counter offed us with the | | | | the counter increased price, you know you can always |
| original auction price. We emailed the auction co. and | | | | back out if you realized that your deal wasn't that |
| said we do NOT accpet your counter offer. The | | | | great after all. |
| auction co. called right away and asked if we still | | | | There are many opportunities out there to get great |
| wanted the property. We stated Yes, but our counter | | | | deals. If you are a first time home buyer, new investor |
| offer was our highest and best offer. The auction co. | | | | or seasoned investor, auctions are a great souce with |
| called the next day and said that their "manager" said | | | | great deals. |
| that we could get the property at $110K with $4K | | | | |