What Are Real Estate Auctions and Why Have Them?

By Preston Ames

Real estate auctions are performed by an auctioneer. In Santa Barbara auctions happen on Wednesdays at 1 pm. These auctions are a place for real estate investors to purchase a property that has been foreclosed on. Not all properties that have been foreclosed on go to sale. There is a legal aspects where a client can postpone or even cancel the sale of the property. A potential investors should know to keep an eye on the property and know what stage the property is in terms of sale.

When a sale has come up and will be going to a live auction an investor should know to bring cashier’s check into the amount that the buyer is willing to pay. Sales are won by the highest bidder at the auction. The buyer gives the cashier’s checks to the auctioneer and then the buyer is given an opportunity to put the title on the property. This receipt is sent to the trustee. They will title the property to the new owner and send the deed.

Buyers should be aware that these sales are “as is”. This means that an owner should be aware that when they purchase the property they are getting the property in the current state. A new buyer should be aware there are tenants in the current property and they have tenants rights. Not all transfer of property is a smooth transition of ownership and the buyer should be aware that the tenant may not want to leave.

The benefit of an auction is that the property is selling the debt on the home. Properties in the Santa Barbara area appreciate well so purchasing a property that the market sees as undervalued creates a great return. Investors should be advised that doing their due diligence before a sale is always advise. Not all properties create the same returns.

Investors can flip a home. This means that they buy the property for a price that they like and then put money to this. They can keep it and lease it to tenants, live in it or put it on the market again and sell it when they see the appreciate. An investor would call this a value add situation. An investor can get higher rental rates then previous and get the appreciate that investors see in Santa Barbara.

Preston Ames has an MBA from Cal Lutheran. He has worked as an auctioneer for 6 years and worked as a marketing agent under a real estate broker. He has a certificate in Financial Planning from UCLA and also graduated from the Yale school of management CIMA certification program. His main areas of expertise are marketing, Finance, and Business.