Are they really great beach front foreclosure deals?

By GAIL LIBERMAN Sunday, September 23, 2007 found at palm beach daily news

Perhaps. Many experts say the deals could get progressively better for potential buyers as more banks start attempting to unload foreclosed properties at below-market prices.

Deerfield Beach real estate consultant, Jack McCabe, CEO of McCabe Research & Consulting LLC, recently told me of a Tampa developer who had bought at the top of the market and needed to sell some condo units. At auction, some $180,000 units went for as little as $90,000. Three-bedroom units that had retailed for $295,000 to $325,000, sold for as little as $180,000.

But before you go chasing area real estate auctions for hot bargains, know what you're getting into.

First, check the background of the auctioneer. There have been a number of real estate scams in which persons have unscrupulously taken title to properties.

Florida licenses both auctioneers and real estate agents. To auction real estate, the state requires a real estate license, but not an auctioneer's license, notes Ben Anderson, chairman of the National Association of Realtors Presidential Advisory Group on Auctions.

Know what type of auction is being advertised.

You probably stand the greatest chance of getting a good deal at an "absolute auction." That's because, with an absolute auction, the seller has committed to selling the property to the highest bidder without any minimum set price.

By contrast, with a "reserve auction," a property is listed for a specific minimum price, undisclosed at the auction.

Bill Sheridan, president of the National Auctioneers Association, Overland Park, Kan., says the real estate auction with the reserve is most often used because sellers frequently need a specific amount to pay off a mortgage.

Certified checks, advance deposits or bank letters of credit typically are required up front to prequalify buyers. An agreement, such as a "Terms and Conditions," also must be signed in advance.

Having trouble selling your home?

Real estate auctions definitely can be a way to attract more buyers.

The cost can be higher than selling a home through a real estate agent. But it often is shared by more people.

While a seller often pays a commission of 5 to 7 percent of the contract price to sell a home through a real estate broker, the cost of auctions could run 7 to 12 percent, Anderson says. That's because it's not uncommon to have up to three agents involved in a real estate auction.

Commissions can come from the seller, who signs a property listing agreement. There may be a "buyer's premium," or a commission provided by the buyer.

There also may be an assessment for auction fees for such things as marketing charges and other costs.

If you are considering buying or selling a property through an auction, keep these pointers in mind.

Auctioneers may turn away sellers whose expectations are too high or who owe too much on a property.