Well, it’s been going on for a while, but it’s now getting more publicity in the press. Home Builders are using auctions as a way to shot gun sales of their existing inventory. The same way wholesalers use the word ‘foreclosure’ to mass market a property, home builders are hoping the general public thinks they’re getting a great deal if they buy at these events. The sad thing is, it’s typically a bunch of uneducated buyers who are getting caught up in the excitement of the bidding action. They’re purchasing on a whim, without representation from a REALTOR®, and no knowledge as to whether it’s a great deal or not. Just because the builder says the home retails for $500k (and the opening bid is $400k!), doesn’t mean that’s what it’s worth. You’ll find out quickly that your $400k home is going for $350k across the street.

Yes, you CAN find some deals in these auctions, however, you’ve got to be VERY careful and know your values like the back of your hand. Yes, a homeowner might walk into $10,000 - $30,000 in equity, but that’s about it. Certainly not the best way to find a deal on an investment property. Before you get caught up in the excitement of it all, make sure you call me first to get an honest value of the homes before you go. Be prepared to be outbid and pay more than you should once the excitement of it all is said and done. For what it’s worth, here’s an article about it, but I’d take it like a grain of salt.