How Much Can I Expect To Save Buying at Auction?


Can I save by buying homes at auction? The short answer is,  it depends. Usually an investor should expect the pay 30 to 50% less than retail value of a fully renovated property to successfully flip the asset and make a profit. However, if the property does not need much renovation or is in a highly desirable area it may sell much closer to retail value due to demand.

In either scenario, as long as the investor is paying less than retail, they have still purchased the best deal available in the market. Remember the market is competitive, so don't get your hopes up for buying a $200,000 present market value home for $35,000. It is entirely possible to purchase a home worth $200,000 between $120,000-$160,000 depending on needed renovations and whose bidding on that specific home.

As a general rule, someone purchasing a home for personal or vacation home use should be willing to pay more than an investor, as they do not have to incur the cost of reselling the property which can be as much as 10% of the resale price. This means that a rational end-user should always win the property they desire and save money off of retail. Remember, if you’ve found the perfect home for you or your family it's worth beating investors. In order to secure the home of your dreams it is better to be successful rather than penny wise and pound foolish in refusing to pay slightly more than an investor would. An investor will confuse the house for cattle rather than a personal home.

That perfect home may not come around again anytime soon, and more often than not we find that end users ultimately regret not bidding higher for that one perfect home when it came around. Your auction concierge should be happy to discuss what they feel, as a market expert, would represent a good value for any property. Ultimately, the decision to buy is yours alone. We’ve seen investors regret "over paying" but never an end user who saved off of retail and got the home they desired.
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