Different Types of Las Vegas Real Estate Auctions
Distinct types of foreclosure real estate auctions in Las Vegas, Nevada
Real estate auctions in Las Vegas could be absolute auctions, reserve auctions or foreclosure real estate auctions where the lender can't put a minimum bid that is more than the foreclosing loan amount. We cover the absolute auctions and bank owned real estate auctions below. Las Vegas Trustee Sale Auction, which is the real foreclosure real estate auction is explained separately. For an in depth discussion of Las Vegas real estate auctions and other issues read our Las Vegas real estate blog.
1:Absolute auctions or government type home, condo or foreclosure auctions, high bidder wins
Absolute real estate auctions are often conducted by government entities or courthouse foreclosure auctions. In courthouse foreclosure auctions the lender can compete with you or reject your offer before the selling price exceeds the mortgage loan. The auction becomes absolute afterward and the highest bidder wins. These auctions are more like an art auction or BLM (Bureau of Land Management) auction. Government auctions such as HUD homes auction require Realtor participation, BLM auctions don't.
An auctioneer speaks legibly and takes his/her time between the bids. The chances are that the bids are for real.
2: Conditional bank owned (REPO) real estate auctions, minimum price has to be met before the sale is approved, high bidder may not win
If this auction is conducted as above you are OK, but usually this type of real estate auction is conducted like an auto dealer's auction. The problem is that dealers are supposed to be professionals and familiar with the auction process and rules, you are not.
Real estate auctions attract customers by advertising very low starting bid prices and trying to get more than one bidder to bid in a competitive situation in order to come as close to the reserve (minimum price set by the seller) price as they can. When the final price is reasonably close to the reserve, they lean heavily on the seller to make the sale happen. Lack of competitive bidding defeats the process.
Good auctioneers make a lot of money and are flown to the auction site. Their job description is to cause as much confusion as possible so the bidders can't tell if someone is bidding against them.
This type of real estate auction starts fast and furious with bids coming one after the other in a matter of seconds. A few homes or condos are declared sold within minutes and at high prices.
If the auction for the home or condo starts at $90,000 and the bid price is up to $130,000 within seconds and keeps going up way past the upper limit on pricing which we have set, and if the same home or condo miraculously falls out of escrow within minutes and is back on the auction block quickly; the chances are that there were no bidders to begin with and the property was sold to no one.
This is done to establish a high and false selling price in order to set up the auction buyers to over bid the properties that will follow. A number of these are re-run quickly.
The trick is to know if you are bidding against someone else or yourself, and although we are very good at this, sometimes even we can't tell if the bid is for real or not. However, we have devised other solutions to get around this.