Many people are enticed by the ads they see for home auctions. More and more auctions are being held on a regular basis in Arizona. Ads will show a photo of a beautiful mansion with a huge banner across it – “$50,000 Opening Bid”. Keep in mind, If It’s Too Good To Be True It Probably Is. There are many potential problems with buying a home at an auction.
- Many homes at auction are sold for current market value – rarely are you getting a spectacular deal.
- If you purchase a home at auction you are responsible for also paying the Auctioneers Fee which is usually 5% of the price of the home.
- The prices listed in advertisements as the opening bid ($50,000 etc) are not what the homes sell for. Most homes have a minimum reserve price that must be met in order to sell. Even if it is an absolute auction without a minimum reserve, many sellers just pull the plug on the auction if market value is not reached – this is legal in Arizona.
- Often you are not even able to look inside the home. It is extremely rare to be able to have an inspection done on the home. You have no way to know if the air conditioning, furnace or appliance work, if there is termites or mold, etc.
- If your bid is accepted at auction you are legally bound to buy the home. No inspection period and no refunds of your deposit.
- Arizona has no regulations on home auctions! Tactics to manipulate bidders are legal in Arizona. Sellers can legally manipulate bidders with Ghost Bidding (where the auctioneer pretends to accept bids) and Shill Bidding (where an agent of the seller poses as a bidder to drive up the price and foster competition among legitimate bidders). This is difficult to believe but true!! Here is a link to an excellent article on home auctions in the Arizona Republic.
- Most people attending home auctions are inexperienced with the auction process and can easily get carried away with all of “the excitement”.
Looking for an excellent deal? We can help you find a great REO foreclosure property, below market value. It doesn’t get any better than that. Foreclosures give you the flexibility of a 10 day inspection period and a fully refundable deposit during the 10 days. Check out current foreclosure deals at our website www.ThePhoenixExperts.com. Don’t foolishly buy a home at auction without a full inspection and appraisal.
Marc Brodeur, Realtor
www.ThePhoenixExperts.com
1-800-300-0263
