Oakland County Tax Foreclosure Auction – Part II
Due to a scheduling conflict, it was held at Ultimate Soccer Arenas – which turned out to be a much better venue for a public auction than the county auditorium where August’s first round was held. That auction left a lot to be desired as the standing-room only crowd of bidders was not allowed to bring any electronic device with a camera into the auction, due to government security policies for the adjacent courts in the building. Besides having way more room, the new venue offered modern comforts like a pretty decent onsite café and easy to access bathrooms which just made this a much better experience for bidders.
So, how many of our readers bought something at the auction?
We saw several bidders pick up a great deal on an investment property. We saw other properties go for retail values and could only hope it was a homeowner buying and not an investor at those prices.
We really appreciated, probably more than most attendees, how the County Treasurer, Andy Meisner, warned bidders repeatedly at the beginning of each of the two days not to buy a property unless they’d done their due diligence. Unfortunately, we still saw more than a few properties go for high enough amounts to lead us to question what due diligence the bidder had actually done.
We spoke to a couple to bidders that seemed to have money burning a hole in their pocket. They were justifying their bidding strategy/limit on their projected future value of properties. Not a bad strategy if you’re an experienced speculator, but not something a novice investor should be doing. Of course, at the current rock-bottom real estate prices, most people are buying with cash – which leaves you a lot of room for mistakes that can be made up for over enough time.
Which leads us to a quick overview on successfully investing via auction purchases:
- ALWAYS do your due diligence and don’t bid on what you don’t know. Even if you can afford to lose everything you just paid for a super cheap property, you may get stuck with back taxes, water bills, special assessments, environmental cleanup liability and in many auctions a commission to the auctioneer.
1. Factor everything into your calculation of the highest amount it makes sense for you to pay for the property. DON’T GUESS! Even if you want to factor in speculation of future value be sure to use solid math and assumptions to determine that future value. Repair expenses, carrying costs, closing expenses, commissions, etc. should all be solidly included in your calculation of maximum bid.
2. Be cold, shrewd and calculating – don’t let emotion into your bidding! Those holding auctions stage them to push bidders’ emotional buttons to get higher prices. There’s no better strategy than pumping up the competitive juices between two or three bidders and getting them to lose sight of the numbers and instead focus on just winning.
3.Lastly, don’t think you have to buy something to be successful. It’s better to go home empty-handed than overpay and regret it later.
If anyone has any interesting stories from the auction or can update us on how their purchase worked out, please be sure to add a comment below.