Are Penny Auctions Real & How to Choose a Legit One

Have you ever seen some ads on Google saying that you can get 95% off on electronics, laptops and HDTV’s? After you click on them, you will find that it is a penny auction site. 95% off?! Is it too good to be true? You may be wondering if this is another type of scam.

I have been researching and bidding on some penny auction sites. Penny auctions are not a scam. However, there are illegitimate penny auction websites. You have to carefully choose one before you start bidding.

I have been researching which penny auctions give the best bargains. I’ve learned that finding the right site can mean the difference between saving $10, saving $100 at best, or at worst, getting scammed out of all your hard-earned dough. During my research, sometimes a site would appear legit, but after careful investigation I would discover the site wasn’t very efficient for consumers or, at worst, they conducted illegal business practices.

I like to use websites that offer the Buy-it-Now option. This option allows you to buy the product for retail price, even if you do not win the auction. Whatever you already spent on the auction is subtracted from the retail price and you simply cover whatever is left.

Also, auctions go faster and are more exciting when the countdown timer does not reset too high or add too much time to the clock for each new bid. Some sites I saw added 2 minutes for every unique bid, which could make an auction last hundreds of hours! A fantastic website I saw only adds 15 seconds for each unique bid. Another positive: This same website has a policy that once the clock goes below 10 seconds, no matter how many people bid, the timer will only reset at 15 seconds. This makes for extremely fast and productive auctions.

On the darker side of things, a common illegal business practice I would find is the use of robots, called, “bots.” Bots are used to secretly outbid bidders, so the bidders still have to pay for bids, but they never win, meaning it is impossible for them to receive the products they have paid for.

Another common but unfortunate business practice is the allowing of company employees and family members to bid against consumers. Not only is this immoral and illegal, but company insiders are more likely just to outbid you and raise the price of that item, creating an extremely unfair advantage for the honest bidder.

The above-mentioned illegal practices are all designed to steal money from honest bidders. So bidders spend a lot of honest money on bids but the company never sends bidders the products they’ve won.

One tip I have for new bidders out there is to find the newest legit websites, because their auctions will be the easiest to win since there will be less competition, since less people know that the site exists. Also, check out their “Terms of Services” and their “Internet Privacy Policy” to make sure they’re legit. Remember to find websites that sell bids for a low price and have countdown timers that never go too high.

The Benefits and Risks of Real Estate Auctions

As many people have discovered, the traditional realtor firm isn’t the only way to sell a property. Real estate auctions are increasingly popular among people who buy and sell properties. As an alternative to the traditional marketplace, “[t]he benefits of selling via auction are particularly obvious during the bidder qualification period.” (Source: “Brokers See Benefit of Auction Process”, National Real Estate Investor) If you haven’t considered the auction route, you should keep the following benefits and risks associated with the auction process in mind. You may find that it suits your property-selling goals.

Benefits of Real Estate Auctions

One of the major reasons sellers seek the auction format is because it often allows them to dictate terms and conditions as well as a deadline. Selling for cash also allows sellers to move forward with their plans without delay once the sale is made. Since roughly 90% of auction sales close, there is every possibility that the deal transaction will close without a hitch–particularly with pre-approved buyers in attendance at the auction.

When it comes to complicated properties, many auction houses actually recommend the use of brokers. This provides sellers with the best of both worlds–the auction format coupled with the selling expertise of the realtors. Often sellers obtain great prices for properties they sell at auction–more than they expected. This is usually because buyers come prepared with a cap and may bid until they reach that cap.

Risks of Real Estate Auctions

While selling properties at auction often results in a great deal, it doesn’t always. There isn’t any guarantee that the price will be bid up by other interested parties. Also, sometimes bidders do not have the opportunity to have home inspections. Buying a home without an inspection is risky for the buyer, so the more inspection information you can present the better. Property sellers “have dozens of decisions and choices on both advisor sale terms and many auction formats.” (Source: “Commercial Real Estate Auctions in Soft Markets”, Heritage Global Partners) It’s important to weigh these considerations carefully. What is the minimum acceptable bid or can the property simply be let go to the highest bidder? These questions must be mulled over in advance.

Sellers who sell at auction have to rely on marketing. While a great auction firm often has regular clientele, some may not do all they can to market your auction. You may want to promote your upcoming sale online or at other venues in order to attract potential buyers to your sale.

Work with a Reputable Auction Firm

When you attend auctions hosted by reliable and respected auction houses, you’ll feel more comfortable about the process and may even find that some risks are mitigated. Many sellers find the auction route liberating. They can plan accordingly because they know what day they are selling their house. Working with a trusted auction firm with experience in real estate is essential for sellers who may be new to the action process.

These are a few of the pros and cons associated with selling a property at auction. Before you make your decision, talk to an auction house that can answer your specific questions and address all your needs.

Source:

“Brokers See Benefit of Auction Process”, National Real Estate Investor, http://nreionline.com/retail/brokers-see-benefit-auction-process

Real Estate Auctions – Can You Handle the Pressure of a Real Estate Auction?

There are two types of real estate auctions, bank foreclosures and house auctions. Both are very different, neither is easy.

Most the time when we think of real estate auctions we think of bank owned foreclosures. That is not always the case, though. Some owner occupied properties have found success through house auctions, as well. The best candidate for this method of sale is a hard to sell house that has unique properties that do not appeal to, or hold value for, other people. A good example of this is your average 1500 square foot house with custom book cases, a full service kitchen built onto the back deck and an indoor recreation area with a built in swimming pool, shower area, bathroom, and wet bar.

Although these items may sound delightful, most buyers are not keen on paying the significantly upgraded price, as compared to other homes of the same style and size that has accumulated from all the customizing. The seller of such a house has to understand that although it is plain to see how much money was put into the upgrades; buyers just don’t want to pay the price unless it is the exact thing they have been looking for. The Seller takes part in a house auction hoping to gain a lot of exposure quickly and find someone who appreciates the eccentricities of the house. With a home auction of 8 or 9%, compared to the 6% of a regular real estate company, the house auction method of selling a home is not always the best option for home sellers.

Bank foreclosure real estate auctions are altogether different. To begin with, their chances of selling are slim. Being that the house was defaulted, the house likely has thousands of dollars due in delinquent taxes, water bills, and special assessments in addition to the amount owed on the mortgage. The minimum bid is usually set, by the bank, to include these costs as well as all foreclosure and attorney fees. Rarely does a house go through auction that is actually worth all that is owed upon it.

The negotiation process is quite different between house auctions and bank foreclosures. With a house auction, buyers are bidding against other buyers. There is probably a reserve that must be met or no sale will be made, but basically the deal is made to the highest bidder. In contrast, bidding in a bank foreclosure auction, a buyer is bidding against the bank and buyer and bank will counter offer back and forth until terms are met or the buyer quits negotiating. The banks are tough and not really expecting a sale at auction, anyway, so any ideas on a buyer’s part that they can bully a bank and the bank will be happy to be rid of the house, are way off track.

The amount of pressure involved in both scenarios make real estate auction buying and selling an activity reserved for a certain type of person. There is a lot of stress involved with buying a house at auction from a foreclosure bank as bidding with the bank is frustrating and the house is always sold in “as is” condition so you cannot be sure what you are looking at for repairs until after the sale is made.

The pressure of the individual seller at a real estate auction comes into play as the bids come close or at the reserve price. When to cut your losses is a tough decision because whether or not the house sells, the auctioneer must be paid. Additionally, with the public now having the pricing information of the house, it will be difficult to get higher bids at a later auction or through a conventional real estate negotiation. It is wise to explore other options before deciding on a real estate auction.