In July I was at a 3-day Real Estate seminar and one of the presenters was a California Real Estate Auction team. When I saw them on the agenda I figured that they came to help banks liquidate mass inventory at great deals for investors.
This particular company had the opposite strategy. The owner of the company accumulated 70 rentals in Northern LA county and was all set to retire. After getting bored with his time, he started an auction company that sold properties at “true market value” which he said most of the time was a premium over the MLS.
They specialized in marketing the auction 30-days or longer before the auction date and they always did the auctions on the front lawn of the property. This concept got me thinking, but it makes sense. When people compete they do crazy things, and the auctioneers themselves said the buyers remorse (once the competition is gone) is huge! So they always get the earnest money deposit right at the auction.
I saw a video on You Tube that demonstrated the on-site auction technique quite well:
Here is another one:
Very interesting strategy, this is something we might consider trying one day. Although the cost seemed slightly steep 10% buyers premium and marketing costs ($5,000+). It might make sense if you get 4 to 5 properties in the same area and can do joint marketing.