I had the pleasure of standing in for one of my agent associates representing a client at the southern Las Vegas REDC home auction.

I don't believe I had attended a real estate auction (wine & antique auctions, yes) since the last market debacle after the savings & loan melt down of the late 1980's early 1990's. Not a lot has changed in the overall structure of the auction although with the much larger volume of properties with which to dispose the organization was more finely tuned.

The staffing consisted of three different entities as well as I could determine: the REDC staff who conducted the auction including registration and information; the financial institutions; and the title companies (at least 3 different companies that I saw).

The auctions of the earlier S&L period had live music and free food versus canned music and hotel vendors supplying refreshments, but the hype level was about the same from the auction company. A lot of relatively young (in their 20’s & early 30’s) attractive men working the floor in their tuxes; young attractive women in visible positions and an assortment of ages working in gate-keeper and ‘guide’ positions. But a lot of high energy all around.

By the time properties were added or removed from the roles I think there were close to 300 properties that were auctioned yesterday. Our client and I made it through about 120 ‘sales’ representing just under 100 properties – as there were a number of properties that rotate back onto the auction block due to the winning bidders not completing the paperwork, having financing issues or discovering material disclosure issues before completing the transaction or, presumably, not meeting the reserve bid requirements.

There were quite a few problems with identifying the type of property in both the printed brochure and when on the block – the most common error was identifying a single unit in an attached product as a 4-plex resulting in bids that far exceeded the value of the individual unit.

Also, the paperwork requires the usual waiver of NRS 113 (governing disclosures and seller liability) but also has a no-financial contingency clause that I imagine gives some ‘winners’ second thoughts before handing over a $5,000 cashier’s check along with a personal check for some extra $thousands of earnest money.

Some of the properties were non-financeable due to age, condition, etc. and those seemed to come back into rotation more frequently during my stay.

Our client made the winning bid on a 1,977 square feet single family home in a gated community located some distance south of McCarran International and not too far east of Las Vegas Boulevard. This property sold new in 2001 for $159,000 and as high as $376,500 in 2005. It had been listed on the MLS for over 100 days at $174,900 and there are 5 comparable sales that closed in 2008 for $210,000 to $260,000.

Our client’s winning bid was $141,750 including the 5% premium charged by the auctioneer. At $71.70 per square foot it is hard to imagine that the same home could be built today for that amount of money even if the land were free. So our client is happy (so long as the seller acceptance is completed) and knowing the market as I do, I feel he received good value.

For the roughly 100 other transactions that I witnessed I would say most of the winning bids were better than could be obtained in an arms length transaction given current market conditions – even arms length with a REO property.

There were properties that I was familiar with that I believe sold for more than today’s fair market value – particularly the condominiums and high-rise units.  However, the greatest difference between this auction and the last I attended is that the majority of buyers got a good deal.

If you intend to try your hand at purchasing a property at this type of auction (not to be confused with a Sherriff’s auction) I would offer some advice:

!    If you are not a professional, get some experienced representation

!    Do your due diligence; thoroughly examine each property you might bid on

!    If you are going to obtain financing make quite sure your lender understands what you propose to purchase (attached vs. detached, auction property) and if there might be any contingencies

!    Consider having an inspector look at your ‘short list’ in advance (this can get expensive, however)

!    Bid in person if you can rather than on the Internet; you get a feel for the cadence of the auctioneer and can often see who is bidding against you (may or may not be helpful)

!    This might sound hokey but consider wearing ear plugs; the decibel level is quite high and can be distracting

!    Know what your highest bid will be after factoring in the buyer’s premium (5% in this case)