There was a press release today on the business wire advertising a real estate auction was going to take place at the end of July here in Houston in one of our hotel conference rooms. As I was reading it, I was getting the impression that I was being mislead. An image was being created that the mortgage crisis has come to my fair city, so now was the time to find a deal at an auction.
Houston has suffered consequences because of the subprime crisis, just as every part of the country has, but we really have not seen the concerns that markets in Florida or California have seen. Although the statement does not mention foreclosures, I had the feeling that this image was intended. Considering that I felt some confusion may have been intended, I thought that an explanation of terminology may be needed for the average consumer.
A foreclosure auction is a process which frequently takes place on the steps of the county courthouse. You are buying a foreclosure that has been listed, so you could go look at the exterior of the property, but otherwise, you are mainly buying the home as is with little chance to inspect it. There are foreclosure auctions which take the form closer to our traditional image of an auction too. A real estate auction is a method that many homeowners are now using to sell homes. The process is simpler than using a Realtor or for sale by owner means, but it does not always offer the seller or the buyer all that they want. This method has the benefit of being quick, which is the real appeal to most sellers. The homes in the real estate auction are not foreclosures, and you may not be getting a deal price wise, although it is advertised as such.
When going into any auction, you should understand the process first. It is easy to get carried away. I have forbidden myself from attending art and antique auctions, because the bidding becomes too much fun. It can be an addiction for certain people. There are Realtors who are now specializing in taking their clients to these auctions, which is not a bad idea if they have experience with them. The problems that I hear involve people finding themselves in deals (contracts) which they discovered to be something that they had not bargained for. I would attend at least one auction, so you can see the process. Go through the literature of the firm holding the auction to determine what the contract may entail. Do some research about these auctions at your library or on the internet. Just be prepared. I have not been privy to these auctions, so I will not claim to know the ins and outs; that is why I am suggesting more research on your part. It is just that this press release struck me as attempting to lead you to believe that the auction may be involving something that it does not pertain to.