Auctions Come to Our Area

Up until now we really haven't seen the large auction house auctions of many foreclosed homes all at once. They've been happening pretty regularly in places like Florida and California. But in this area we'd see a home here or there that was auctioned, but not much in the way of large groups of homes. That appears about to change.

Tranzon is a Richmond, Virginia company that operates real estate auctions in a large number of states. And on March 6th local homes and land start to show up in a bigger way. There's an auction in Fairfax that includes homes and land in both Fauquier and Culpeper counties. If the inventory situation gets a lot worse, expect to see more of these. If, on the other hand, there's a significant market improvement this spring and summer, this could be a relatively rare event.

Auctions can bring good bargains. But if you go in unprepared you can also find yourself carried away by the bidding frenzy. You'll need to come prepared to pay $10K cash on the spot if you are the winning bid on a property. You'll need to plan on closing within 30 days with no opportunity for home inspections and no contingencies.

You also need to know that there is normally a buyer's premium that's added to the winning bid price, probably around 10% to pay the auction house. Make sure you've budgeted for that.

Most auctions companies do pay commissions to agents. And, it makes sense to have an agent help you do the homework to determine what comparables have sold for and what the property's potential is. Also note that in many cases, there are dates ahead of the auction when you can look at the property and get an better idea of what you'd be buying.

It's a different way to buy a house, but there can be advantages. Personally, I have to say I hope we're not going to see a lot of these events in 2008!