There is something energizing and exciting about attending a live auction. And while there are many different types of auctions that are appealing to wide audiences some of the best entertainment around can be gained by attending an open public auction. A few months ago I visited the steps of the county courthouse for my first encounter with publicly held real estate auctions and I was hooked. From the moment that the auctioneer arrived on the scene there was a brewing level of anticipation that was almost palpable among the attendees that were gathered outside on a warm spring morning.

Looking around I noticed that some of the people in attendance were carrying binders or manila folders with information about certain properties that had been posted on the auctioneering companys website. I myself had a printout of the five to six properties that had caught my attention and was eager to watch the ensuing frenzy as the homes listed for sale were announced.

Although the list of properties that had been available through the auctioneers website was up to date, I soon discovered that not every property that was named as being in the auction was in deed included in the outdoor event. I learned that because of delays from the bank, negotiations between the homeowner and the mortgage lender or payments received by the mortgage company had either resulted in the cancellation of the sale or postponed the property temporarily from being sold through the real estate auctions. As the cancelled and postponed listings of property were read by the auctioneer at the beginning of the public auction I crossed off the properties from my list, but was excited to see that a few of the addresses listed on my printout remained. Along with the others in attendance I wait for the first piece of property to be called up for auction.

After reviewing the properties that had been removed from the auction block, the auctioneer in charge of the county real estate auctions began the proceedings by reading the address of the first house up for auction including the lot number, subdivision and case number of the foreclosed property. This was not one of the homes that I was interested, so I stood quietly as the opening bid was announced. The auctioneer said that the bank had the opening bid, however any advance on that amount would be accepted. To my amazement a man at the back of the crowd raised his hand and advanced that amount by a meager fifty cents. The auctioneer asked if there were any other bids and hearing none closed the first sale with an offer that was only fifty cents over what the bank had listed the opening bid at.

Now I should mention that the bank was not going to give the property away for nothing, the opening bid on the house was $158,986.14, but for only a fifty cent increase man at back of the group had just purchased an easily $220,000 home for a good price. The man stepped forward to fill out his information on a prepared purchase contract and handed the auctioneer a cashiers check for $5,000 to secure his winning bid, then the auction continued.

I stood there wondering if this was normal to bid just a few pennies over the opening bid for a piece of property when the same thing happened with the next listing. Another person in the crowd advanced the opening bid by a quarter over the banks offer and the second property was sold off through the real estate auction for just twenty-five cents over the opening asking price of the house. The next property that was brought before the assembled audience was announced and the opening bid presented, but this time there were no takers and after a moment the auctioneer announced that the property was sold back to the bank for opening price. The same thing happened with other properties that were of no interest to the gathering of bidders, but for the properties that were being bid on the amounts of the initial increase were minimal at best. Twenty-five cents here or seventy-five cents there, for people to out bid the banks that owned the properties listed in the real estate auctions.

On one occasion multiple bidders showed interest in the same home that must have been valued well over $600,000 but had an opening bid of $340,734.10 This property was a steal at just over half of the actual value to the real estate market and the action was on. Round the price up to the nearest dollar, was the first bidders remark. Add one hundred dollars to that, said another person who could smell the pending real estate deal. The first bidder took a serious look at the property and then announced that he was increasing his bid by $1,000.00 After turning to each other and realizing that the deal could quickly cost more than either person was willing to spend, the second bidder said that he had some other properties he was interested in and surrendered any further advance on the price. Hearing no more bids the auctioneer dropped the gavel and sold the property, again collecting the information on a purchase agreement and receiving a $5,000 cashiers check for the down payment of the purchase price.

At the end of the morning about half of the homes listed had been sold to third-party bidders. Some of these savvy investors were purchasing property for an investment group that would turn a profit on the homes purchased after making any repairs or renovations to the property, while others had attended one of the county real estate auctions with the express purpose of buying a house that they or a family member could live in. In either case those that had bid on properties listed through the real estate auctions had made smart deals by purchasing houses that were all well below their market value. By making their purchases every single person that had closed a deal was assured of having instant equity from buying houses through real estate auctions and avoiding paying out realtor fees or negotiating with sellers on the conditional repairs of the houses.

At the close of each of the real estate auctions, buyers are reminded that all outstanding balances on the properties that they have just purchased are due by noon the following day in the auctioneers office. For those that bid on only one house, the amount was relatively small, but there were two or three investors that had purchased three houses each and while each property required a $5,000 cashiers check as a deposit, the balance due was over one million dollars. For these people attending two or three real estate auctions a month was a normal occurrence and the money that they made by selling off their investments was also generating over a million dollars a month in profits.

As I walked back to my car I thought real estate auctions are the way to invest in the housing market and although the auction was not the typical bidding frenzy that I had expected, I was impressed that houses could be sold for a few pennies or dollars over the opening bid of the banks.