patrick.net

Auctions are usually not a good place to buy anything. Years ago I attended some auctions of company equipment (everything from hardware to company cars) from dot-com busts and realized that most itmes sold (AS-IS without any warranty) in between their fair used price and the price for the same item but NEW (!). It's all about psychology, people feel good when they get an item at an auction and therefore are often willing to bid far more than it is worth. I would even go further and speculate that auctioneers take advantage of this and place some fake paid bidders into the process.

Been to 2 auctions in my life, one for real estate, and the other for equipment. In both cases I found myself saying this a lot: "Are you stupid?"

gbenson says

Been to 2 auctions in my life, one for real estate, and the other for equipment. In both cases I found myself saying this a lot: "Are you stupid?"

Ah. The beauty of opening bids. Isn't this what Patrick is advocating for? This happens at the steps too. Sometimes you see two guys going at it for awhile. After one person "won", people would ask him... How much did you pay for it? His answer was.... I paid too much. :)

Proving your manhood can cost you big bucks...... sometimes. :)

Have fun bidding.

E-man says

Ah. The beauty of opening bids. Isn't this what Patrick is advocating for? This happens at the steps too.

Still better than realtors withholding all info and just telling you that there has been a "better offer". Sure, a public auction does not mean that people won't fall for inflated asset prices (or that there isn't any fraud), but better than the current system.

Mell,

Not sure if I agree with either methods.

1) close bids - if you do your homework, you should know how much to bid for.
2) open bids - people tends to get caught in the heat of moment & overpay for it. On top of the winning price, they have to pay a 5% premium.
3) trustee sale open bid - I love this. No 5% buyer's premium. It's a number's game to the veterans. Those guys stop at 80% FMV. You can get it for 80.1% of FMV. :)

Yeah, on the real estate auctions, I think people forget about the fees. We put in a bid on a condo that was MLS listed. There were multiple offers and ours was highest, but was still under list. The owner decided to sell it at auction to see if he could get more. Since all the bidders were investors, we were aware of the fees and did the math, we resubmitted our original offers, which were about 7% lower than what we submitted when it was MLS listed. The owner was pissed, but what'd he expect? I think he yanked the auction and re-mls listed it, but by then I had lost interest and someone else got it, hopefully for less than we originally bid.