Should you purchase your home from an auction website?

Normally I’d simply answer, “No!” and just move on, but I have two client’s whose experiences are worth repeating as cautionary tales.

The central Florida area has been an interesting area with several “great” deals in the past couple of years, and legion are the stories of investors swooping in and picking up properties for a fraction of their worth.

As awesome as these stories are, these savvy investors generally came in with a lot of capital, found a distressed home, poured money into restoring the property and either sold or rented the home, to produce a nice tidy profit.

One of my clients, hearing rumors of awesome opportunities found what he thought was an AWESOME deal for a condo being sold on E-bay!

By the time I learned of the transaction (I was being considered to manage this “new” property) there was little I could do but pick up the pieces (which I am doing with alacrity).

However, I learned that the property was purchased for 150% the current market value. Had my client secured the services of a licensed Real Estate agent they could have purchased a similar property for as little as 60-70% of what they paid.

The second story is not so terrible (for my client) but someone lost out big!

Another client of mine who is in the market for an investment home in Central Florida found a home, researched it properly, and found that the bank owned property was being put up for sale on Auctions.com.

We both registered for the auction and discovered that the property had a fair market value of about $30,000 – $40,000. (No really, it needs THAT much work).

During the auction, my client found that the “last” bid was placed for above this asking price and the “next” permitted bid was at a $10,000 increase.

He, (wisely) walked away from this auction.

The dupe who bought this property payed $70,000 almost TWICE the fair market value!

So these auction sites seem to be GREAT if you’re a seller. But if you plan on buying, these auction sights are NOT going to get you a good deal.

If you want a good deal on a home, I recommend you secure the services of a licensed real estate agent. We have established relationships with experienced and capable realtors who we can refer you to, if you need a buyer’s agent.

If you are an investor, RPM South Orlando can also help you (and your real estate agent) find a good investment property (quite different from a family home) and then we can turn that investment into a steady revenue stream.

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