In the last blog post about Allure condominiums auction I got to the place that the 1882sf came up and I started bidding. I also wrote that my investor and I had already agreed about the high limit of $350,000 which would have brought up the final price to $385,000 since there was a 10% auction premium for an unfinished condominium.
The difference between professional auction buyers and amateurs is that the professional knows why he is attending the auction and the amateur doesn’t. The professional auction buyer is there to make a deal, amateurs may stumble upon one. I was there to make a deal.
The reason that I am so hard on buyers that attend a real estate auction while not represented by a Las Vegas Realtor or real estate agent who is experienced at buying from the real estate auction is that they are doubly blind and their mistakes either cost them a good deal or they end up paying too much.
What really happens in a real estate auction in Las Vegas?
Bidding at a real estate auction requires expert management of three separate but related factors that will decide the outcome.
1: Real estate auctions are business and not personal, ego kills. The bidder attends an auction only to buy real estate or to gain intelligence on some kind of property, not to make enemies.
2: In a real estate foreclosure auction, or any auction for that matter, the bidder has to fight off other bidders; so it is imperative to identify the competition and figure out their strength, weaknesses and motivation, if at all possible
3: At the same time that a bidder is bidding, he/she has a conversation with the auctioneer. Most real estate auctions, including foreclosure auctions have a minimum or reserve that is set previously by the seller. The auctioneers know how much the reserve is and have to do all they can to get the bids to approach the reserve or get close enough so that they can lean on the seller, and believe me they will pressure the seller to make the deal happen. I have done both sides.
A professional buyer communicates with the auctioneer by bidding fast or slow or raising bids by diminishing amounts and taking a longer and longer time to respond when nearing the limit.
What happened when I bid on the Allure, Las Vegas high rise condominium:
A pretty lady was sitting next me and was talking the whole time with a bidder on her cell phone. She bid a few times on a couple of other units, however she didn’t act like an auction expert. I asked her if this was her first time in a real estate auction in Las Vegas and she said yes!
Question; what is she doing there and why someone would let a clear amateur bid for him or her? I already knew that she was not a good bidder, but didn’t know her motivation.
The same lady started the bidding at $200,000, I bid $250,000 and the only reason for that was to see who the competition is and if there is more than one bidder, the amount was low enough for others to jump in, it turned out to be the same lady. She bid $275,000 and I answered with $300,000, her next bid was $310,000 and I raised it $340,000. Why so fast and furious? I believed that would get my investor a great deal at that price so why mess around and at the same time I let her know that I was strong and meant business, so she could drop out. Guess what, she didn’t drop out.
Next she bid $345,000; I raised that to $347,000 and announced that this could be my last bid by saying one last time. Now why would I do a thing like that? The reason is either she was bidding in behalf of another buyer, in which case I was telling her that I am not going to fight her. Remember, ego kills at an auction. Or she was bidding on behalf of the seller, which I suspected was the case and I was telling the seller that I am not willing to go much higher and if he wants to sell, back off. Well that didn’t work and she bid again at $348,000, I announced that $350,000 is my final bid and set down the bidding paddle. She raised the bid by $1,000 and said that her bidder will go much higher. WOW, I’ve never seen a bidder announce after her winning bid that she will go much higher‼ Fatal mistake in an auction!
Anyway, we left immediately after as best laid plans don’t always work out, but I walked out with all I wanted to learn about the auction. The name of the game is gathering intelligence.
Like Paul Harvey who recently passed on used to say “and now you know the rest of the story.”
I hope that if you didn’t get anything out of this, at least you learned NOT to attend real estate auctions in Las Vegas without being represented by a knowledgeable Realtor or real estate agent.
Related web-site pages: Las Vegas high rise condominiums for sale- buying Las Vegas high-rise condos, investing in Las Vegas real estate- Las Vegas investment properties, Investing in Las Vegas residential investment properties such as Las Vegas, Henderson or North Las Vegas homes, condos and high rise condominiums.
I read your previous blog wherein you suggested the auctioneer was amateurish for accepting such low incremental bids, but then you offered such a bid. Why?
As for the winning bidder making a “fatal mistake,” I must be misunderstanding that her intent was to post the winning bid, which she did. Is that an incorrect understanding?
I looked at the auctioneers’ Website where he posts the winning bids. This particular unit has a sq. ft. price more than double the next winning bid. What’s the deal with that?
Finally, to your knowledge how many of the auction sales are actually looking to close?
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Well my friend, as for
I read your previous blog wherein you suggested the auctioneer was amateurish for accepting such low incremental bids, but then you offered such a bid. Why?
I never wrote that the auctioneer was amateurish.
“I told my investor that we have amateurs who don’t belong in a real estate auction in Las Vegas and “But the poor auctioneer was doing his best to get this crowd going so he played with them”. I don’t know how you infer that the Auctioneer was amateurish, actually he was quite good.
For accepting such low incremental bids, but then you offered such a bid. Why
Please see the bid increments and I wrote that you let one low bid to see how many jump in and want to bid.
What she did was a fatal mistake because if she was the winning bidder, she just told the auctioneer that she can go much higher, now remember this clause
“The seller and the high bidder will meet in private and the seller will accept or reject the high bid”, well she just told the seller she will pay a lot more. On the other hand if she was bidding on behalf of the seller, she just scared us away. What exactly could she have gained from doing it?
You should ask the auctioneer that and in many real estate auctions the sell rate is under 25%. This number will go up appreciably as banks become more realistic. Three properties that I was tracking in REDC auction, all sold.
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