Didn't Bid at Auction!

Random Ramblings
1

In my morning paper this morning there was notice of a house auction just 8 blocks away:

4 bedroom 2 bath home, minimum bid $10,000. Auction starts at 8 AM sharp.
So I shot over there with no breakfast. Nice, big, older 2100 SF move-in-able home on a corner lot with trees. Built in 1924, big porch, carports, big back yard. REALLY NICE.

Williams and Williams, Auctioneers, had online bidders and us 5 people in the back yard. I saw an expired MLS listing on the kitchen counter for $166,900.

A minimum personal check of $2500 would be needed. 4 people bid, 2 online and 2 in the yard. THE HOUSE WENT FOR $51,000.

I feel a little sick. I could easily have waved that yellow bid card for up to $55,000. I had a check with me. The bank would have financed it in the 30 days or we could have pulled the cash out of somewhere. I could have afforded that house. Could even have moved in. But I was scared to bid.

But I have 5 incomplete unrenovated houses and feel stretched thin. Plus I hadn’t had time to do any checking on that house except what I eyeballed just before the sale. Saw that the roof looked okay, kitchen better than my house, and there was a heat pump in the basement. But I was still scared to bid.

My off-the-cuff valuation was easily $90,000+ for a pretty quick sale. But I was still scared to bid.

Now I see what FDJake was saying about getting a property at a low price and just turning it for a quick profit. But I was scared to bid.

But I would never have though of shooting out to that auction except for reading that advice last week. Now I am primed for keeping my eyes open. Next time I will have eaten breakfast. Next time I might NOT be scared to bid.

Furnishedowner

2

With an auction, you need to have a pretty good eye for value, you need to know when to bid, and you need to know when to STHU.

Some people get cught in the frenzy and way over bid getting the mindset “I’ll be darned if he/she is going to outbid me”…natutrally, that’s what the auctioneers feed on.

Keith

3

I wouldn’t have bid without doing some title research first.

I can spot a bad roof and I can fix plumbing. I know good areas from bad and what prices are. I’m not much good at making $100k IRS liens disappear, so I want to know about them before I bid.

I think you did the right thing. You didn’t have enough information.

4

Now I feel better. So an IRS tax lien is NOT wiped out in an auction?

The auctioneer said that “You can not assign the contract, and you must keep ownership for 120 days.” All potential title holders had to be there or there had to be a Power of Attorney.

My contractor said, “That house was worth $95,000 easy. I was going to bid, but I had to go out of town this morning. Maybe we should go together on the next deal like that?”

Hmm. Really like my contractor a lot. Totally honest and a self-made kind of guy. Maybe that’s the silver lining in “woulda, coulda, shoulda” day.

Furnishedowner

5

Half of being a good investor is knowing when a deal is a good one. The other half is knowing when not to try to make the deal.

Your situation could get much worse and this house could be a burden on your family. There’s no telling what you missed although it’s unlikely that you missed that much. But you would have been stretched thin. What if you fell off a roof and broke your leg? What if someone got sick and you had medical bills? Could you keep up then? But you already know this and that’s why you didn’t bid. The house was probably a great deal but you weren’t in a position to take it.

Now you need to figure out why you weren’t in a position to buy the house and fix the problem so that you can buy the next one! Maybe you need to refi a few places and pay a few more off to improve cash flow. Maybe you need to sell a few places. Maybe you just need to hunker down and save some money.

Two years ago I realized that we were in a large recession and that prices were lower than I have ever seen. I found many good deals but we were too far in debt to do much about it. We systematically worked at the debt and got in a much better position. I missed buying ford at a few buchs a share. i knew it was a mistake then, but couldn’t do it. I considered spending $10k on Ford stocks. I had the cash but at the time it would have wiped me out. I knew I couldn’t afford it. Now I would have over $100k worth of stocks and they are still cheap.

You made the right decision for you - you can’t second guess stuff like that.

6

Hi,

Being auctioned by an auctioneer, you would not have been obligated to buy if it was found that the property still had liens such as IRS. If the home were being sold with a lien it would have been required to be disclosed prior to bidding! You would have acknowledged knowing a lien existed when you registered to bid and would of had to sign a release acknowledging being adviced prior to bidding!

But, sometimes our sixth sense tells us it’s better to walk away rather than get into something your being required to keep for 120 days, a lot can happen in that time and having 5 other properties to finish and get sold is all the reason to keep a good prudent reserve.

I go to a lot of auctions where I could have; only to realize later it was not worth the headaches and I am glad I passed, I just can not buy everything!

No Regrets!!!

               GR
7

No, I just bought a property with a tax lien on it. To be clear, a federal tax lien. It’s a whole different animal than any other tax liens. The IRS has redemption rights 120 days from the date of the foreclosure sale. That means they can buy it from you for what you paid plus any closing costs, interests, repairs, minus any rent you might have recieved. The clock does not necessarily start ticking the date you buy it, unless you bought it at the courthouse steps, it is the date the judge ordered the sale. It’s very rare they redeem the property. I’m pretty sure this applies in all states, as it’s a federal thing.