Caveat Emptor – The continuing saga on real estate auctions

If you read this blog, you’ll know I have been looking to purchase an investment property for some time and routinely scan the local newspapers for real estate auction ads. The following ad in Sunday’s, June 8, 2008, San Francisco Chronicle Real Estate section caught my eye.

Upon seeing this ad, I immediately went on line to the site and downloaded the sales brochure to find this is an auction being conducted by Kennedy Wilson, a company who have conducted several auctions which I have checked out in the last two months.

In the past, prior to inspecting the properties, I would logon to BAREIS, my Multiple Listing Services (one of the perks of being a Realtor), and check out the comparable properties in each area including what was for sale and especially the recent solds. By recent, I would go back six months and then compare those prices to ones which sold in the last month or two. This would give me an idea if the prices in the area where stable are still falling as they are in many areas throughout California.

In doing so for this auction for Raintree Terrace, a condo complex of 136 units, in Fairfield, California, I found every single property for sale at the auction listed for sale in my MLS FOR EXACTLY THE SAME PRICE. See the two images below, the first is the page from the Sales Brochure listing the units for sale, and the second is a printout of the properties and the asking prices from my MLS.

Thus, it is truely BUYER BEWARE in attending these auctions. You need to do your homework and not get caucht up in the hype. In doing my research, I could not find the property which the ad stated was previously priced at $350,990 in my MLS. The highest price there was one of the units selling 3/3/07 for $324,625. Once at these auctions, they rely on the adrenaline rush one gets for all the people trying to buy the same thing that is being portrayed as a “good deal” and in truth is something you could buy for the same price today, not more, for remember the ad says “Minimum Selling Prices”. And if you are patient, who knows, maybe the day after the auction, you may be able to buy it for less.