I went to a real estate auction yesterday at the Howard County courthouse to see how those operations went and to get a feel for it if I ever wanted to get into the real estate investing thing. All in all the whole deal was a bit anticlimactic because I assumed it’d be this big deal with lots of people and all sorts of fanciness, I mean it’s at court right? (I’ve actually never gone to court before)
Well, when the auctioneer said courthouse steps, they actually meant courthouse steps. Like standing outside the door, just hanging out, auctioning off properties. On the list that day were two properties in Howard County and no one bid on any of them. The auctioneer started off by reading the first property, location, terms and conditions (which was standard and that reading was waived for all subsequent auctions), and starting taking bids. $160k was the starting price and so he opened it up for bidding… no bites. Other than a co-worker who went with me, there were two other guys there with clipboards, taking notes, yammering on their cell phones to their investors; it was a pretty small grouping.
The first one closed with the property sold back to the bank and the second one went through the same deal, sold back to the bank. That one started at $210k and, when we looked it up later that day, it had a assessed value of over $300k – wonder why no one bit, soft market probably? Who knows.
Too bad no one bought, it would’ve been interesting to see what happened from there. The auctioneer did talk to some woman who was obviously new, like us, and explained a few things. You buy the properties as-is and you have to go through the process of evicting anyone who lives there (yuck); like tax liens, you’re responsible for researching everything yourself to make sure the government isn’t hiding toxic or nuclear waste in cans underneath the foundation. Also, the sale blows away every lien under the first mortgage, which makes you responsible for IRS liens and things like that.
Overall it was an anticlimactic but interesting way to spend twenty minutes or so by the lovely courthouse.