Attending real estate auctions (trip report)

[dc_publius]

I went to my first RE auction yesterday. The auction was run by Williams&Williams and it looks like a good way for a seller to get rid of property but not a particularly good place to find a deal by a buyer. The auction house charges 1.5K for closing costs, and 3K for the auction service. The sale is subject to final approval by the owner of the property.

The auction I went to was for this property. The property is not in the greatest shape. Most walls and some ceilings are stripped to the framing. There is some water leakage in the basement and either existing or prior termite problem. (but not a big problem) Roof may also need to be fixed or replaced. All electrical and plumbing would have to be replaced. Someone was obviously squatting there at some point. The place is basically a shell.

In terms of location, this area is the closest ghetto to the US Capitol/Capitol Hill area. It's also two blocks away from H St/Benning Rd intersection, which has some huge public(?) housing buildings and a ton of problems. This area is getting slowly redeveloped - at least on paper.

The comps are in the 500-650K range. The house next to this one was sold last year - at the peak of the market - for 500K and it was basically a shell also and it's just about finished right now. (Still some construction going on.)

Anyway, the crowd was a mix of complete newbs and seasoned investors. About 100 people total. Seasoned investors mostly came out to watch/offer hard money help/etc. About 1/2 the crowd raised their hand and said they've never been to an auction before when asked. People registered to recieve an auction ticket and the bidding started in front of the house over the loudspeaker. Opening bid was 50K. It quickly jumped to 200K, stalled a little. The auctioneer took a bit of a break to hype up the property and the bidding started to climb again. It came down to 2 bidders. Finally one of them won the place for 405K. The winner has to put down 5% immediately (nonrefundable) and settle within 30 days. The pros I talked to said thir max for the place was ~300K. I wasn't really planning to buy (came out there with a friend) but I was willing to pay 250K, which would've been a deal to me.

In general, it was an interesting experience. Anyone out there involved in this aspect of RE?